AIR - Air NZ.

[couta1]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.

[Tony Two Gloves]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.
Whoa Couta I now see what you mean by XXXL holding, that is a huge amount I thought you were around 100,000! Makes my 75,000 shares look pathetic, I wanted to go to 100K but didn't dip to my $2.15 I wanted - sitting tight with a $2.19 average cost.......

[couta1]

Whoa Couta I now see what you mean by XXXL holding, that is a huge amount I thought you were around 100,000! Makes my 75,000 shares look pathetic, I wanted to go to 100K but didn't dip to my $2.15 I wanted - sitting tight with a $2.19 average cost.......
Nice average you have there,it took me all those shares to get my average down from $2.85 to $2.34 currently and I wish it was lower but thems the breaks.

[workingdad]

I have come close to buying more when it was a shade above 2.15 but figured to wait patiently until tomorrow to see what the divvy and special and outlook will be. I am hoping for some rewards being a holder but by holding off have hedged my bets - if its an announcement not well received I am poised to capitalise, after the disappointment of the last divvy announcement I am waiting with baited breath to see what happens tomorrow. With the VAH sale they have room to be more generous but lets see.....

[Tony Two Gloves]

You are well positioned, when you sell them for 3.00 and bank a tidy $232,980 on top of your $67K divvy's you will say to yourself it was worth not sleeping well on the 25/8/16 lol.

[BC_Doc]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.

353k shares ≠ poverty

[Beagle]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.

What if its 25 cps in total or even 30 cps :D The cat needn't worry about you eating cold jelly meat out of a can anytime soon :)

[Raz]

You are well positioned, when you sell them for 3.00 and bank a tidy $232,980 on top of your $67K divvy's you will say to yourself it was worth not sleeping well on the 25/8/16 lol. the same result would happen if he had sold down at near the peak or traded somewhat ...except it would be realised as at now..I've only kept my capital gains made in this respective share in the past twelve months invested as I'm somewhat risk adverse.a little leery on what the 2017 forecast reveals..that leaves me with 105,000 shares to attract a dividend. I'll just risk my return year to date on this one.

[winner69]

This day 96 years ago (1920) the first flight across Cook Strait - 110hp Le Rhone Avro flown by Canterbury Aviation from Blenheim to Upper Hutt. Flight time from Christchurch / Kaikoura / Blenheim / Upper Hutt was 4 hours 40 minutes

Things haven't changed too much - AIR still fly planes with propellers across Cook Strait

Source: http://www.nzhistory.net.nz/page/first-flight-across-cook-strait

[Traderx]

My pick for the big day tomorrow

$615 NPAT pre one-offs
$395 outlook for this current year
12 cpl final, 5 cpl special fully imputed

[IAK]

CL's been looking pretty grumpy lately, it could be the blow up doll issue, or a 10 cps final and an underwhelming special of 5 cps.

[Snow Leopard]

CL's been looking pretty grumpy lately, it could be the blow up doll issue...
http://golfhotelwhisk.wpengine.netdna-cdn.com/wp-content/uploads/2012/11/GolfHotelWhiskey.comAutopilotFromtheMovieAirplane. jpg


https://www.youtube.com/watch?v=fVq4_HhBK8Y

Best Wishes
Paper Tiger

[IAK]

Great idea Paper Tiger, that would certainly save loads on pilot salaries. I think you should suggest that at the next AGM.

[Snow Leopard]

great idea paper tiger, that would certainly save loads on pilot salaries. I think you should suggest that at the next agm.

US$462,800 per annum per pilot (https://jobs.flightglobal.com/job/1401446014/b787-non-type-rated-captain-of-hainan-airlines-b737-767-a330-captain-also-welcomed-2016-new-contract/) in salary+benefits alone !

Best Wishes
Paper Tiger

Disc: This seems to be a particularly silly advert but there is a lot of demand out there.

[RupertBear]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.

Oh yikes! I am such a small fish I cant for the life of me fathom owning SO many shares :eek2: WOW respect to you! :)

[hamish]

Just made it into the Wellington Airport Air NZ Koro Lounge. There was a queue at the door and a sign outside saying fully congested and no complimentary passes will be accepted. It's chaos inside, queuing for the food service like kids in line at boarding school. I've never seen it so full and I travel every week WLG-AKL-WLG. Looking out the window, 4 Air NZ planes all in process of getting prepared.. (makes shareholder smile!)

Nothing wrong at all with the domestic duopoly/monopoly I would suggest. Greater international inbound + business feeding this regional network. Of greatest concern, the fridges are almost fully bereft of beer stock.......

[percy]

Oh yikes! I am such a small fish I cant for the life of me fathom owning SO many shares :eek2: WOW respect to you! :)

A lot of truth in the old saying.
"How to make a small fortune in the share market"?
"Start with a large one,"...!!....lol.

[couta1]

Oh yikes! I am such a small fish I cant for the life of me fathom owning SO many shares :eek2: WOW respect to you! :) Small fish grow into bigger fish given time but to put it in perspective we have nearly all our retirement funds in the market and live in a basic house, drive a basic car and own an old boat in which to catch fish in.:)

[RupertBear]

Small fish grow into bigger fish given time but to put it in perspective we have nearly all our retirement funds in the market and live in a basic house, drive a basic car and own an old boat in which to catch fish in.:)

This wee fish has shrunk from the stress of owning Wynyard shares! I will keep my eye out for your old boat as I dont wish to get caught just yet! My plan is to grow into a big old happy fish! :t_up:

[RupertBear]

A lot of truth in the old saying.
"How to make a small fortune in the share market"?
"Start with a large one,"...!!....lol.

I think you certainly need some pretty large b***s to own that many shares and still sleep at night! :D

[Bobdn]

All the best for tomorrow, Couta1! I hope Air delivers an obscenely big dividend. An absolute vulgar amount of money that has even rhe most committed capitalist feeling a little embarrased and queasy.

[Beagle]

All the best for tomorrow, Couta1! I hope Air delivers an obscenely big dividend. An absolute vulgar amount of money that has even rhe most committed capitalist feeling a little embarrased and queasy.

Make a decent deposit on this Couta me ol mate https://youtu.be/X5Q9wosRt2Q

[percy]

I wish all Sharetraders who hold AIR shares get a cracker result tomorrow.
I am sure you all will be pleased with it.

[Baa_Baa]

Well, I hope it works out well for all you high rollers tomorrows, and for the minnows and other rounding errors on the shareholders register. You deserve some upside after a capital pounding the past few months and such outstanding performance results since.

So, today I get to fly from Paradise to Hamilton and what the heck, I walk onboard and say to the gorgeous hostess, "this smells like a new car?" She says, "well, that's because it is new, just flown in from France this week. You will be the first person to sit in that seat." How about that.

What a treat, a brand spanking new ATR72-600 series (I think it was).

Enjoy your day in the sun AIR holders, I hope it's all you've hoped for.

BAA

[vin]

Has been a hell of a rollercoaster ride since I began share trading about 2 years ago, especially with AIR. Learnt a huge amount. All the best for tomorrow.

[RTM]

CL's been looking pretty grumpy lately, it could be the blow up doll issue, or a 10 cps final and an underwhelming special of 5 cps.

Nah...Bill English has had a chat and said he needs lots and lots of cash.
Fingers crossed.

[see weed]

I'm just doing the possible divvy calculations for myself. 353k shares times 20c equals 70600 minus 5% RWT equals 67070. I think I can live with that but the resident feline said on an earlier post that I was heading for poverty, I guess everyone's definition of poverty is different aye, but I can cope with this level. PS-see weed that's means you hold approx 88k shares plus or minus quite a few.
I topped up and bought another 55,000 just in case it's a good report. Good luck everyone:eek2:.ps went out for a cheap chinese roast, then went to the pub and put $20 into a machine, 5 minutes later all the bells and whistles and bang, won the jackpot...$890:cool:.

[Raz]

I topped up and bought another 55,000 just in case it's a good report. Good luck everyone:eek2:.ps went out for a cheap chinese roast, then went to the pub and put $20 into a machine, 5 minutes later all the bells and whistles and bang, won the jackpot...$890:cool:.

These comments make me smile, I will follow your luck, d-day today and watching from LA.

[bull....]

DDay boys an girls - I've got a 100 shares on the announcement and Im bloody nervous.

[winner69]

That announcement should please most of you

[sl234]

Is it up? I'm trying to find it

[BC_Doc]

Is it up? I'm trying to find it

Keep refreshing this page if it calms your nerves

https://www.nzx.com/markets/NZSX/announcements

Its certainly not helping mine :lol:

[RTM]

Is it up? I'm trying to find it

Yep...me to. Which announcement Winner ?

[777]

I think he was referring to post #8029

[QOH]

Tap tap hurry up AIR, most companies seem to get their results out by 8.30 am

[workingdad]

25c special - oh yeah baby :t_up:

[OldGuy]

https://www.nzx.com/companies/AIR/announcements/287933

[OldGuy]

• Record earnings before other significant items and taxation of $806 million*, up 70%
• Record net profit before taxation of $663 million, up 40%
• Record net profit after taxation of $463 million, up 42%
• Operating revenue of $5.2 billion, up 6.2% (3.8% excluding divestments and foreign exchange)
• Passenger revenue of $4.5 billion, up 8.9% (4.7% excluding foreign exchange)
• Operating cash flow of $1.1 billion, down 2.4%
• Strong cash position of $1.6 billion, up 21%
• Gearing at 48.6%, an improvement of 3.8 percentage points
• Fully imputed final ordinary dividend of 10.0 cents per share, bringing the 2016 full year fully imputed ordinary dividends to 20.0 cents per share, an increase of 25%
• An additional fully imputed special dividend of 25.0 cents per share

[couta1]

Wow, 35c in total fully imputed.:t_up: Couta personal divvy recalculation 353k times 35c equals 123550 minus 6177.5 RWT equals 117372.5 plus around 34000 of imputation credits. Don't think I will be eating jellymeat tonight.

[OldGuy]

Total dividend of 35 cents per share FULLY IMPUTED

[OldGuy]

353k*0.35 = $123k :)

[Bobdn]

Total dividend of 35 cents per share FULLY IMPUTED

Fantastic! Just a small holder but very pleased!

[bull....]

yippee $35 for me :t_up:

now I just gotta hope the share price moves up enough or ill still lose

[Beagle]

Make a decent deposit on this Couta me ol mate https://youtu.be/X5Q9wosRt2Q

Well mate. I have a deal on my desk here for a new Profile 750HW for $139K knocked down to $132K, happy to flick you through the PDF on that deal if you want it. Maybe we can get a better deal by buying one each at the same time :D

[Raz]

For once I can thank the NZ government for something:-) Great result for all investors.

[Teeps]

Great result. Congrats to all holders including couta1 and Roger who have never lost the faith in this business. You guys deserve your rewards! This holder is certainly happy this morning!!! Great special divvy... now lets see what the share price does this morning...

[couta1]

Well mate. I have a deal on my desk here for a new Profile 750HW for $139K knocked down to $132K, happy to flick you through the PDF on that deal if you want it. Maybe we can get a better deal by buying one each at the same time :D Sounds a plan but I'd be too scared to get it scratched.

[see weed]

Wow, 35c in total fully imputed.:t_up: Couta personal divvy recalculation 353k times 35c equals 123550 minus 6177.5 RWT equals 117372.5 plus around 34000 of imputation credits. Don't think I will be eating jellymeat tonight.
Good on you couta1. I'm only getting 50k plus 10k sp gain to date, plus any gain today, but can't complain:t_up::D:t_up::cool:.

[boysy]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________

[couta1]

Good on you couta1. I'm only getting 50k plus 10k sp gain to date, plus any gain today, but can't complain:t_up::D:t_up::cool:. I'm sure you've more than made up for it with A2, congrats to all long-suffering holders, enjoy your rewards.

[couta1]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________ Mr Market already knows this.

[Kelvin]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________

So if earnings drop to FY2015 levels ($474m) where SP was ~$2.40 - then add $0.35 of dividends = $2.75 SP today??

[Raz]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________

Not at all, will be interesting to see the SP performance in the next few days, based on $55 a barrel.

[winner69]

Excitement over

So NPBT was really $806m

F17 guidance $400m-$600m (26c to 38c eps)

Share price should be well over 250 today and could kick on from there

Need to look at future while oysters and chips for lunch

[boysy]

Will be interesting seeing brokerage houses reporting on this as this result looks to be the zenith of performance for AIR for the foreseeable future. Wait for the backlash from travelers re price gouging once this is splashed all over the media.

[bull....]

you will all still lose if the share price doesn't rally strongly today.

if you brought anywhere between the lows of 2.05 - 2.35 say you will still need to take into account the 35c dividend payout which will come of the price.

say it goes down today which is possible as it looks like they missed on some metrics? say it goes to 2.15 and stays there and then pays div 35c ten 2.15 - 35 = 1.80 you all lose unless one day it goes back above your entry price.

so guess you better hope it goes up today

[Poet]

I'm also a very happy holder today, well done AIR. If $400m to $600m NPBT is as bad as it gets over this cycle, then I'm happy holding for future dividends.

[Balance]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________

SP has been dropping and by 30% since high this year in anticipation of the downgrade.

It is indeed a major downgrade from F16 and certainly for analysts as well who have been waiting for numbers from AIR to downgrade their forecasts.

The 25 cps fully imputed dividend is however a big surprise to most of the analysts (one broking house forecast total dividend for F16 of 21 cps - so only 24 cps out!

So on yesterday's closing price of $2.24 less 35c dividend = $1.89 so stock is trading on a first cut forward PER of between 5.10 to 7.7 and dividend yield of 11.6% (net).

I think I can live with that.

[winner69]

you will all still lose if the share price doesn't rally strongly today.

if you brought anywhere between the lows of 2.05 - 2.35 say you will still need to take into account the 35c dividend payout which will come of the price.

say it goes down today which is possible as it looks like they missed on some metrics? say it goes to 2.15 and stays there and then pays div 35c ten 2.15 - 35 = 1.80 you all lose unless one day it goes back above your entry price.

so guess you better hope it goes up today

...it'll go up today bull

Some might even be buying to get the divie

Market loves surprises as you are aware

[Beagle]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
________________________

Not at all. I have been saying for weeks now I expect FY17 earnings of $500 - $600m before tax so I'm only a little out. Mr market fully cognisant of the FY17 outlook already.


Excitement over

So NPBT was really $806m

F17 guidance $400m-$600m (26c to 38c eps)

Share price should be well over 250 today and could kick on from there

Need to look at future while oysters and chips for lunch

Based on the mid point of expected range $500m before tax, (in the white hot heat of extensive new competition) I get EPS of 32cps. The 10 year average PE for AIR is 11, (I think 12 is appropriate given we're enjoying the lowest interest rates ever) so 32 cps x 12 = intrinsic value of $3.84. Of course it won't get to that but I remain of the view that AIR's shares trading cum 35 cps in dividends are very good value at yesterday's closing price.

I'd be surprised if there wasn't a really good bounce today...I'll be buying if there's any opportunities that present themselves. Don't see any reason now why this can't be $2.50.

[see weed]

you will all still lose if the share price doesn't rally strongly today.

if you brought anywhere between the lows of 2.05 - 2.35 say you will still need to take into account the 35c dividend payout which will come of the price.

say it goes down today which is possible as it looks like they missed on some metrics? say it goes to 2.15 and stays there and then pays div 35c ten 2.15 - 35 = 1.80 you all lose unless one day it goes back above your entry price.

so guess you better hope it goes up today
Have you checked the depth lately. looks like buyers building up, anyway, one day at time, lets enjoy today;).

[Ninefingers]

Does anyone know when the dividend record date is? I've had a quick skim through but haven't found it.

Sitting down with a nice big coffee now to have a proper read.

Happy holder.

[winner69]

Does anyone know when the dividend record date is? I've had a quick skim through but haven't found it.

Sitting down with a nice big coffee now to have a proper read.

Happy holder.

https://www.nzx.com/files/attachments/242336.pdf

8th September - paid 19th

[swillisam]

https://www.nzx.com/files/attachments/242336.pdf

8th September - paid 19th

I believe it's 9 September record, 19 September paid.

[Beagle]

Sounds a plan but I'd be too scared to get it scratched.

Here's my hint to you my good friend. You can't take it with you. In a world where we sometimes struggle to find relaxation and enjoyment, sometimes one must learn to simply enjoy the spoils of one's success. :)
You took what I consider to be the most ball-sey stake I've ever seen anyone take on here. Go and enjoy it...a new Jaguar or a new Profile boat...whatever grabs your fancy and whatever you and your wife will enjoy...its not a sin to enjoy your success mate.

[Beagle]

I'm also a very happy holder today, well done AIR. If $400m to $600m NPBT is as bad as it gets over this cycle, then I'm happy holding for future dividends.

And that's it right there. White hot competition and they're still forecasting $500m before tax at the mid point of their forecast. Its clear they have a robust business model...at least as good as any other airline operation out there.

[GR8DAY]

Here's my hint to you my good friend. You can't take it with you. In a world where we sometimes struggle to find relaxation and enjoyment, sometimes one must learn to simply enjoy the spoils of one's success. :)
You took what I consider to be the most ball-sey stake I've ever seen anyone take on here. Go and enjoy it...a new Jaguar or a new Profile boat...whatever grabs your fancy and whatever you and your wife will enjoy...its not a sin to enjoy your success mate.

........hear, hear mate. Couldnt have put it better myself.........might even go trade the old 17 footer in myself.

[Balance]

And that's it right there. White hot competition and they're still forecasting $500m before tax at the mid point of their forecast. Its clear they have a robust business model...at least as good as any other airline operation out there.

The uncertainty is what the analysts could not handle. To the extent that they now have a range to work with, they will be more inclined to be bolder with their recommendations.

Prefer myself for AIR to be conservative rather than overtly optimistic. There are far too many variables out there (FX, oil price, competition etc) beyond AIR's control to be precise.

[RupertBear]

Wow, 35c in total fully imputed.:t_up: Couta personal divvy recalculation 353k times 35c equals 123550 minus 6177.5 RWT equals 117372.5 plus around 34000 of imputation credits. Don't think I will be eating jellymeat tonight.

well done couta! :t_up:

[Raz]

And that's it right there. White hot competition and they're still forecasting $500m before tax at the mid point of their forecast. Its clear they have a robust business model...at least as good as any other airline operation out there.

Can the same be said for American Airlines..me thinks not, i can see AIR gaining ground back on the AUK-LAX route which is where a lot of this premium came from previously. The Chinese airlines may be a harder nut to crack.

[777]

Look at the bottom of this page to see how many people are reading this thread. 120 who are not even members.

[Raz]

good grief Rodger....selective memory:-) haha then its gone!

[swillisam]

Look at the bottom of this page to see how many people are reading this thread. 120 who are not even members.

Lots of lurkers on the thread and the share depth is filling up nicely.

To be fair, I normally keep an eye on the threads but don't actively participate. I must say that there are number of very knowledgeable and b***sy investors on the forum and their comments make it an entertaining and educational place to read, you know who you are :t_up:

[Bobdn]

A bad result would have been like catnip. Not sure I would have had the stomach to come back to this thread :)

[bull....]

down she go as expected

[biker]

Share price has dropped. Happy to have sold most of my holding around 2.20 prior to the announcement.
Far too many moving parts in the cyclical airline business.

[Everwood]

I'm blown away with the special dividend of 25cps. I did not expect the special dividend to be that high.

[couta1]

down she go as expected Means little, take a look at SCL and A2 this week, buying more this morning.

[Beagle]

Its hard to believe that institutions would be surprised with the FY17 outlook. I would have thought $500m on an ex divvy price of ($2.22 - 0.35) = $1.87 gives 32 cps after tax which gives a forward PE of 5.84 during a period of white hot competition.

Opportunity knocks ?

[sb9]

down she go as expected

One word, instos usual play "TREE SHAKING"....

[bull....]

Means little, take a look at SCL and A2 this week, buying more this morning.

it doesn't matter if the price is going down if your holding for ever , enjoy the divs only matters if you have to sell.

having brought a2 at 50c and scl at 1.50 both luvly companies but totally different to air nz

[boysy]

Called it well bull sometimes people only see what they want to see.

[biker]

I'm blown away with the special dividend of 25cps. I did not expect the special dividend to be that high.

And an excessive splurge which may well be to the detriment of the airline in the future IMO

[Raz]

You just have to know yourself and position well and stick with your position.

[couta1]

Called it well bull sometimes people only see what they want to see. Sometimes it's best to stick to your knitting ie Rosehip oil and leave others to theirs. PS-Just about to recalculate my divvy again.

[Raz]

And an excessive splurge which may well be to the detriment of the airline in the future IMO

A few people have said that to me, so you are not alone, just like a SOE.

[couta1]

One word, instos usual play "TREE SHAKING".... Yep and once that's finished other fish will start turning up looking for a good divvy feed.

[777]

A few people have said that to me, so you are not alone, just like a SOE.

They obviously do not have the faith in current management as others do.

[biker]

Sometimes it's best to stick to your knitting ie Rosehip oil and leave others to theirs. PS-Just about to recalculate my divvy again.

I don't wish to be harsh but I guess you will have to reduce that by over 20K due to the sp drop today

[winner69]

Nice to see that staff are getting a bit of a thank you - $20m of it

Might ease the consciences of Luxon and his mates a bit - that's if they even feel guilty about their excessive pay packets

($20m was what the top 15 earners got between them in F15 - so 15 earn what 8,200 hard working souls get as a bonus (Seems fair)

Suppose Luxon's halo is shining bright again - it seemed to lose it's glow a while ago

[boysy]

Right so mum and dads are going to come to the rescue to stave off Insto tree shaking ? Any Jonny come latelys or divi hunters got burnt on the companies own guidance outlook this looks like it could go sub $2 prior to going ex divi. With more and more competition I wouldn't be supposed for the lower band of $400m being downgraded again.

[bull....]

forgetting the fact that air nz missed on some analyst estimates , if you look at the Qantas share price you can see a similar reaction with there share price - down after a record result

[Longhaul]

($20m was what the top 15 earners got between them in F15 - so 15 earn what 8,200 hard working souls get as a bonus (Seems fair)


Doesn't read so well when you put it that way!

[Balance]

Called it well bull sometimes people only see what they want to see.

That's why it is a market - buyers and sellers with different perspective on value and sp movements.

Thank heavens for that!

[couta1]

I don't wish to be harsh but I guess you will have to reduce that by over 20K due to the sp drop today No, because no one knows where the price will be a month or two after going Ex, my divvy in the bank remains the same regardless . Once the weighing machine evens things out, the share price will drift back to true value which as I've said before is $2.40-$2.50 IMO allowing for next year's projections. Off to work now, have a nice day everyone.

[Beagle]

Its hard to believe that institutions would be surprised with the FY17 outlook. I would have thought $500m on an ex divvy price of ($2.22 - 0.35) = $1.87 gives 32 cps after tax which gives a forward PE of 5.84 during a period of white hot competition.

Opportunity knocks ?

Naysayers are boring me to death with their negativity. None have bothered to respond to this objective post. A forward PE of 5.8 at a time of white hot competition.
People see what they want to see...others like me look at the facts objectively.
On a very quick look through the financials I can't see anything untoward.
EPS before extraordinary items and after accounting for tax was 51.64 cps.
In terms of some people's comments that AIR have overpaid in respect of the special divvy I commented some time back that the net proceeds of the VAH sale was 25 cps to AIR's shareholders and also commented that the time for silly fishing expeditions in terms of investments in overseas enterprises was over...who wants Ansett MK3 ? I suggested the board pay out the full proceeds of the Virgin sale and they have.
Gearing is fine and very conservative for this industry. They already have a substaintial capex programme over the next few years which will lead to one of the youngest airline fleets in the industry and are extremely well placed to fund that.
They have new investment coming to easily account for matching capacity growth too tourism growth why would we want them to retain cash to expand any more than that ?
I welcome the large special, I think it places a discipline around senior management to manage the company sensibly going forward.

[RupertBear]

No, because no one knows where the price will be a month or two after going Ex, my divvy in the bank remains the same regardless . Once the weighing machine evens things out, the share price will drift back to true value which as I've said before is $2.40-$2.50 IMO allowing for next year's projections. Off to work now, have a nice day everyone.

I like the way you think! You have an awesome day! :)

[Raz]

Naysayers are boring me to death with their negativity. None have bothered to respond to this objective post. A forward PE of 5.8 at a time of white hot competition.
People see what they want to see...others like me look at the facts objectively.
On a very quick look through the financials I can't see anything untoward.
EPS before extraordinary items and after accounting for tax was 51.64 cps.

The reason Rodger is who agrees is buying and not going to comment to the audience:-) Ok I'm buying for starters:-)

[vin]

Have a feeling that I should be topping up at these prices... Stoked with the result.

[winner69]

NTA is shown as $1.76 a share

What's a good multiple to use for NTA?

[Beagle]

The reason Rodger is who agrees is buying and not going to comment to the audience:-) Ok I'm buying for starters:-)

With you Raz, I have been buying this morning and will continue to monitor for further opportunities :)

[thestg]

My loan I took for my AIR investment has to be paid back in 2020. This dividend alone will pay off the interest up till 2019. I have still got 7 more dividend payments to come (hopefully) between now & 2020. There will be a lot of sp ups & downs but I have plenty of time for the share price to recover. I am very happy with holding this investment.

[BlackPeter]

NTA is shown as $1.76 a share

What's a good multiple to use for NTA?

Last time I bought into AIR the multiple was around 0,8 :p, and I remember that I made some money (selling them some years and a number of dividend payments later); Who knows - we might reach or drop below the $1,50 I mentioned earlier after ex-dividend?

[Beagle]

Last time I bought into AIR the multiple was around 0,8 :p, and I remember that I made some money (selling them some years and a number of dividend payments later); Who knows - we might reach or drop below the $1,50 I mentioned earlier after ex-dividend?

Of far more relevance is what multiple of NTA a similar company like QAN is currently trading at. I will look into this when time allows.

[see weed]

My 2c worth again. Big buss. news in tomorrows paper. AIR paying big div:t_up:. Mum and dad investors think wow I'm only getting 3% on my $10,000 = $300 after a year. Think I will buy $10,000 worth of AIR shares for $2.16c = 4630 shares and pick up the 35c div = $1,620.50c . And only have to wait a couple of weeks for div. Maybe a little surge in sp on Monday morning;).

[BC_Doc]

Enjoying listening to CL deliver his presentation live

http://www.airnewzealand.co.nz/latest-annual-and-interim-reports

He seems to understand the complex competitive environment they are operating is and and well-placed to mitigate foreseeable risks etc

[winner69]

Of far more relevance is what multiple of NTA a similar company like QAN is currently trading at. I will look into this when time allows.

QAN is on a outrageous multiple

QAN NTA is A$1.20

On same multiple AIR is worth just shy of $6

Good eh

[King1212]

Dip my toes in....where you can get 12% plus return on dividend now??? With interest rate 3%...I think still worth of the risk....

[Raz]

QAN is on a outrageous multiple

QAN NTA is A$1.20

On same multiple AIR is worth just shy of $6

Good eh

It also been the exact opposite in the past, If SP ends up less than NTA then the market doesn’t believe that the accounts accurately reflect market value. In other words, future write-downs to NTA are being forecast. Secondly, the market is often implying that it has concerns over a business’ viability or profitability.

If you believe these have merit then consider if you should be holding.

[Beagle]

QAN is on a outrageous multiple

QAN NTA is A$1.20

On same multiple AIR is worth just shy of $6

Good eh

Thanks mate. you'll find a similar thing if you look at Delta or American Airlines, both trading at huge premium's to NTA and also both operating in a highly competitive environment.

What BP or anyone else paid years ago is ancient history and of no relevance whatsoever to the current situation. Its all about what the company can earn going forward and a PE of 5.8 is the white hot furnace of this new competitive environment is only half its 10 year PE average.

[winner69]

To appease the public who might see AIR profits as down right outrageous

Air New Zealand says increasing competition will continue to push down air fares and the airline will sell around 800,000 fares for under $100 this year
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700658

[stoploss]

Right so mum and dads are going to come to the rescue to stave off Insto tree shaking ? Any Jonny come latelys or divi hunters got burnt on the companies own guidance outlook this looks like it could go sub $2 prior to going ex divi. With more and more competition I wouldn't be supposed for the lower band of $400m being downgraded again.

boysy , on the TIL thread you constantly reference the PE of TIL vs BWX ( or whatever it is )
How about you do a bit of QAN vs AIR then come back and let us know what the score is ?
btw , 100 share have gone through at 4.72 TIL you better update the thread ..........

[Beagle]

I listened in on the call. Free cash flow really accelerates after FY18. 20 cps sustainable fully imputed dividend going forward was strongly inferred given strong free cash flow, strength of liquidity and financial strength. Based on a SP of 1.90 (2.25 - 0.35 forthcoming divvy), this gives a gross yield of 14.6% on the theoretical ex divvy price. More than compensates me for the risk of investing in this well managed company right across the cycle. Will hold long term.

[see weed]

I listened in on the call. Free cash flow really accelerates after FY18. 20 cps sustainable fully imputed dividend going forward was strongly inferred given strong free cash flow, strength of liquidity and financial strength. Based on a SP of 1.90 (2.25 - 0.35 forthcoming divvy), this gives a gross yield of 14.6% on the theoretical ex divvy price. More than compensates me for the risk of investing in this well managed company right across the cycle. Will hold long term.
This is better than Disney Land. Up 3c now:t_up:. Maybe all loose fruit gone now. $2.50 here we come and $2.15c ex div;).

[Beagle]

This is better than Disney Land. Up 3c now:t_up:. Maybe all loose fruit gone now. $2.50 here we come and $2.15c ex div;).

LOL mate I have never ridden those roller coasters and experienced the high's and lows but I suspect what we're enjoying is a very similar experience :) The result and outlook is very much as expected as far as I'm concerned. The special dividend is the best case of what I was hoping for and removes any possibility of an Ansett Mk3. I really like the way they're growing the airline in a more disciplined manner now. FY17 capacity growth now 4-6% and two thirds of that is because of the annualisation of Bounes Aires and Houston.

As for the joy of the special divvy and the outlook of ongoing gross dividend returns of 14.6%, oh my goodness :t_up: After this current fleet modernisation which is ostensibly complete in two or three years time management indicated in the call the next cycle doesn't start till mid next decade ! What are they going to do with all that free cash flow from 2019 to 2025 :) Superb dividend hound stock.

[Jay]

An awful lost of shares being traded today, $1075K at time of writing, so who is buying/selling?

[Bobdn]

I bought a further 20000 at 2.19 for a grand total of 44000. Air is my fourth largest holding now after CNU, GNE and ANZ.

Didn't see that coming when I woke up this morning.

[Balance]

An awful lost of shares being traded today, $1075K at time of writing, so who is buying/selling?

10.84m shares - broker tells me local selling and offshore institutions (attracted by the unbelievable yield) hovering up the stock.

That's why the sp started going up when the overseas institutions started buying this morning.

[BlackPeter]

...

What BP or anyone else paid years ago is ancient history and of no relevance whatsoever to the current situation. Its all about what the company can earn going forward and a PE of 5.8 is the white hot furnace of this new competitive environment is only half its 10 year PE average.

Absolutely correct. It is only the future which counts. However - sometimes it pays to learn from the past, and AIR (as many other airlines) used to be in the past in situations their management never predicted (and more than once). Whether they are right this time with their predictions - who knows? Buying another ANSETT might kill them; Another 9/11 anywhere in the world and the business will be down for at least a year. A big volcano outbreak on a busy route - and business might be down for months. Remember SARS - travellers just stopped travelling. Oil prices going for the stratosphere again ... and business will be down. Talking about "down": Only one downed plane (may it be by Russians, Ukrainians or any other idiots) - or a plane lost for other reasons and the randomly selected airline might be a goner. AIR was lucky last time.

Now, I realise that while all these things happened during the past decade or two ... they obviously will never ever happen again. Well, at least we don't know. Call this risk ... and risk needs to be paid for.

I agree that the recent numbers for AIR look good ... if we assume everything goes well from here. But will it? I don't know. In my view too many past problems to just call it a spell of bad luck.

Only hindsight will tell whether AIR's current risk premium is high enough.

[Balance]

Of far more relevance is what multiple of NTA a similar company like QAN is currently trading at. I will look into this when time allows.

Some Australian institutions switching out of Qantas into AIR - fascinating to see who has more firepower today to determine the closing price.

Dis. From broker

[troyvdh]

Not intending to be downer...I fly a bit...My preference for long haul...probably last choice of airline would be AIR...one reason albeit trivial..they serve tap water..chlorine....does anyone else agree ?..very humid in Washington.

[King1212]

Not intending to be downer...I fly a bit...My preference for long haul...probably last choice of airline would be AIR...one reason albeit trivial..they serve tap water..chlorine....does anyone else agree ?..very humid in Washington.

Does not matter tap water..i prefer to drink it so long they made profit and keep up with the juicy dividend:t_up:

[brend]

10.84m shares - broker tells me local selling and offshore institutions (attracted by the unbelievable yield) hovering up the stock.

That's why the sp started going up when the overseas institutions started buying this morning.

well I was hovering up some at 2.17

[Beagle]

Airlines are high risk for sure BP. You bought during the worst effects of the GFC so well done to you but assuming there's another GFC coming and waiting till then presupposes you have a better home for your cash now.
I think a forward PE of 5.8 in this new competitive environment speaks for itself and more than compensates investors for the risk involved but each to their own and in this stretched market if you find better value then I think you'd be doing extremely well. The forward dividend yield of 14.6% gross is exceptional. I will do some work later on net capex for the foreseeable future, (remember net capex is only what they expend after normal depreciation).

Yes Balance, on a balanced view of risks and rewards I can certainly understand insto's switching from QAN to AIR. (Chinese carrier growth into Australia is 50% for FY17) so AIR by no means the only ones subject to increasing competition and QAN said as much in their outlook statement wherein they refused to give forward guidance.

[Balance]

Have a look at THL - got sold down when it reported. Now up nearly 10% from the closing price on day of announcement.

Point being that it is important not to let the sp determine your view but let your view determine if you are going to buy or sell (or hold) based upon the results and what the company is likely to deliver vs other stocks in the market.

I can live with AIR delivering 35c fully imputed dividend and an ex-dividend share price yielding in excess of 10%.

[Beagle]

Air management in the call emphasized that the next major round of capex isn't till at least mid next decade so lets call it 2025.

Looking at their scheduled capex as provided in the graph in their analysts presentation of a total of $2.1b in the next 5 years we see capex scheduled as follows:- (estimated based on graph representation),
2017 $660m Est Depn $500m Net Capex $160m
2018 $700m Est Depn $520m Net Capex $180m
2019 $570m Est Depn $540m Net Capex $30m
2020 $150m Est Depn $560m Net Capex $(410m)
2021 $30 m Est Depn $560m Net Capex $(530m)

2022 - 2024 based on what management said to analysts should be years of similar net negative capex as 2021.

Perhaps now people can see the tremendous free cash flow potential that the CFO Rob McDonald was talking about later in this decade and into the next.

[workingdad]

Air management in the call emphasized that the next major round of capex isn't till at least mid next decade so lets call it 2025.

Looking at their scheduled capex as provided in the graph in their analysts presentation of a total of $2.1b in the next 5 years we see capex scheduled as follows:- (estimated based on graph representation),
2017 $660m Est Depn $500m Net Capex $160m
2018 $700m Est Depn $520m Net Capex $180m
2019 $570m Est Depn $540m Net Capex $30m
2020 $150m Est Depn $560m Net Capex $(410m)
2021 $30 m Est Depn $560m Net Capex $(530m)

2022 - 2024 based on what management said to analysts should be years of similar net negative capex as 2021.

Perhaps now people can see the tremendous free cash flow potential that the CFO Rob McDonald was talking about later in this decade and into the next.

I also quite like the graph showing ownership versus leased planes and how ownership has been improving over the years. Some of this capex will be offset by reduced leases.

More I read the more I am content with the management of AIR. I think their forecast is in line with expectations and factors in considerable competition impact given the tailwinds of other areas.

Now a long term holder as well and comfortable parking them in the drawer and taking the divvies.

[Beagle]

Interesting difference in accounting treatment between QAN and AIR, (first of what will be many observations as and when I get time).
QAN announced a $75m bonus for employees for FY16, (those that had been subject to the 3 year wage freeze) but will take that as an extraordinary item outside normal operating costs in the FY17 year
AIR announced a $20.5m bonus for its employees, (most of whom have had regular 2% per annum inflation increases each year) and expensed that cost as a normal operating cost in FY16, (being paid next week)

Spot the company that's disingenuously reporting employee bonus payments.

[RupertBear]

10.84m shares - broker tells me local selling and offshore institutions (attracted by the unbelievable yield) hovering up the stock.

That's why the sp started going up when the overseas institutions started buying this morning.

But who is selling and why now?

[BlackPeter]

But who is selling and why now?

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.

[workingdad]

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive :confused:

[BlackPeter]

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive :confused:

Dividends are nice (well for share holders), but what really matters are earnings ...

[Balance]

But who is selling and why now?

If you are a local institution heavily weighted in the stock (partly via the Government sell down at $1.65), it is probably the right thing to reduce as AIR is definitely past its cyclical peak earnings and has just had its earnings officially downgraded by 33%!

[Beagle]

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.

Its not nearly as big a gap as you suggest. Analyst expectations were obviously pre extraordinary items, (every man and his dog, especially any analyst worth his salt knew there were extraordinary items in regard to the sale of VAH and the cargo settlement). Earnings after tax and excluding those extraordinary matters was 51.64 cps, slightly down on average analyst expectations but in accordance with guidance of $800m plus before tax and extraordinary items. Outlook is consistent with my expectations.

[Nasi Goreng]

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive :confused:

I was having similar thoughts and share price needs to get over $2.35 so that ex divi price can hold above $2 which is a nice support level technically. The ex divi price should drop in theory by the amount of the dividend. The value of the company is 35c less the day the dividend is paid. All other things being equal, it should recover over time due to the fact more dividends will be paid in the future. Ironically, the higher it goes in the short term, the more comfortable I am being a holder. If the price stays around this level, I may sell before the record date.

[King1212]

I was having similar thoughts and share price needs to get over $2.35 so that ex divi price can hold above $2 which is a nice support level technically. The ex divi price should drop in theory by the amount of the dividend. The value of the company is 35c less the day the dividend is paid. All other things being equal, it should recover over time due to the fact more dividends will be paid in the future. Ironically, the higher it goes in the short term, the more comfortable I am being a holder. If the price stays around this level, I may sell before the record date.

really? With 35c per share..n u are selling out?

[777]

really? With 35c per share..n u are selling out?

Theoretically selling cum dividend is the same as selling ex . Personal choice. All depends on the share price action before and after.

[Beagle]

Selling out just before record date or immediately after ex date usually results in sub par short term performance all other factors being equal according to dividend stripping studies I have seen.

Generally those buying ahead of a dividend and holding for several weeks after ex, on average make short term outperformance gains.

Anyway for all fellow dividend hounds the beagle has crunched the numbers for you, (remember the 5% RWT comes off the dividend grossed up for imputation credits so for every share you own assuming you don't have an exemption certificate for RWT you'll get

35 cps / 0.72 = gross dividend 48.6111 cps
Imputation Credits @ 28% 13.6111 cps
Resident Withholding tax at 5% 2.4305 cps
Net Dividend 32.5695 cps

Anyone on a lower tax rate than 33%, (under $70K per annum) will be able to claim back a portion of the RWT and / or Imputation credit when they do their FY17 tax return.

e.g. A taxpayer on a marginal tax rate of 17.5%, (up to $48K per annum) would get a refund per share of (48.6111 x 17.5% = 8.5069 tax - tax deducted 16.04cps) = 7.5331 cps so their net dividend after calculating their tax refund would come to 32.5695 + 7.5331 = 40.1 cps. People on under $48,000 per annum must love N.Z.'s imputation system as they get 5 cents in extra dividend due to the tax credits, how good is that !

[simjp81]

Great result today, but still unsure about going forward. Does AIR still have a div reinvestment plan? If so anyone know when they announce the purchase price for that?

[freddagg]

I am a dividend hound and I am rejoicing.
Gross dividend for the year is 62.5 cents and forward guidance is for their second most profitable year ever. All for 2.25, unbelievable.

[King1212]

So ex date is 8th sep and recorded date is 9th sept. That means we need to hold on 8 and 9 to be entitled the dividend...right? After that share could be sold?

[couta1]

I was having similar thoughts and share price needs to get over $2.35 so that ex divi price can hold above $2 which is a nice support level technically. The ex divi price should drop in theory by the amount of the dividend. The value of the company is 35c less the day the dividend is paid. All other things being equal, it should recover over time due to the fact more dividends will be paid in the future. Ironically, the higher it goes in the short term, the more comfortable I am being a holder. If the price stays around this level, I may sell before the record date. The thing is no one knows how the stock will behave going Ex divvy, I could give you many examples over the last couple of years where stocks haven't dropped at all after going Ex. The market didn't know how big this divvy was going to be and has priced the stock in the $2.20ish range so there is also a good possibility that the SP may not drop at all or only marginally. The other thing is we don't know how far the SP is going to go before going Ex, just wanted to chuck these possibilities out there and that it may not be as clear cut as, It's going to drop 35c for sure. Funny how most of the gloom merchants posting on here are non holders aye.

[winner69]

What a week on this thread - nearly 240 posts and in spite of all the excitement, ramping etc the share price is down 1 cent for the week

C'est la vie

[BlackPeter]

So ex date is 8th sep and recorded date is 9th sept. That means we need to hold on 8 and 9 to be entitled the dividend...right? After that share could be sold?

If the 8th is ex dividend, than this is the first day you can sell it without losing the dividend.

[BlackPeter]

The thing is no one knows how the stock will behave going Ex divvy, I could give you many examples over the last couple of years where stocks haven't dropped at all after going Ex. The market didn't know how big this divvy was going to be and has priced the stock in the $2.20ish range so there is also a good possibility that the SP may not drop at all or only marginally. The other thing is we don't know how far the SP is going to go before going Ex, just wanted to chuck these possibilities out there and that it may not be as clear cut as, It's going to drop 35c for sure. Funny how most of the gloom merchants posting on here are non holders aye.

Absolutely correct - NOBODY can with certainty predict how a share price is going to develop. There are only likelihoods. Agree as well, that there are many cases where stocks lost less than the dividend (going ex) or recovered very soon. There are as well examples for stocks losing much more than the value of the dividend.

Related to your last sentence ("Funny how most of the gloom merchants posting on here are non holders aye"): I don't see how this would be strange or funny? Makes perfect sense that people concerned about the future SP (you call them gloom merchants) don't hold. Why would they if they expect the SP to drop? Just putting the money where their mouth is - so to speak.

Discl: not holding ;)

PS: I know how it can feel if you really love your stock, and have been in similar positions like you are now. I apologise for annoying you by (presumably) being one of these "gloom merchants" touching your nerves. I learned however myself that while the "gloom merchants" are always annoying (for those who want to hold) and not always right (nobody is ...), they often have something worthwhile to say. Sure, there are plain down-rampers as well, but they are in my view the minority and easily compensated through the professional up-rampers (we all know them, don't we?).

Don't worry - she will be right, whatever right means :) - and I definitely wish you and all other AIR holders all the best. I could easily live with a rising SP ....

[RupertBear]

Yep and once that's finished other fish will start turning up looking for a good divvy feed.

This little fish had a wee nibble at $2.17 :D

[Snow Leopard]

Volume today of 14,098,409 shares with a VWAP slightly under $2.21 !

AIR has not seen such as this since the government sell down in November 2013.

I see this has a grand battle between the short-term buyers who read the dividend bit and the those with longer time frames who read all the information.

Best Wishes
Paper Tiger

Disc: I will definitely be issuing a downgrade when I have the time.

http://www.tuxboard.com/photos/2016/08/crash-airlander-10-720x405.jpg

[workingdad]

The thing is no one knows how the stock will behave going Ex divvy, I could give you many examples over the last couple of years where stocks haven't dropped at all after going Ex. The market didn't know how big this divvy was going to be and has priced the stock in the $2.20ish range so there is also a good possibility that the SP may not drop at all or only marginally. The other thing is we don't know how far the SP is going to go before going Ex, just wanted to chuck these possibilities out there and that it may not be as clear cut as, It's going to drop 35c for sure. Funny how most of the gloom merchants posting on here are non holders aye.

Yep, happened when I was holding GNE, no drop at all ex divvy last year.

My original post was questioning the logic of the formula/calculation from some not my personal opinion. I was getting the impression from some that the large special that hadn't been factored in was somehow going to result in a more negative outcome than they were indicating when it was being considered as a 5c special.

Just trying to get my head around the amount of shares traded today and some at 2.155. Beggars belief from my mind set.

There's been some big players selling off over the last couple of months when the AIR SP has shown strength and today I think seeing the size of the divvy made the decision to continue with this knowing the divvy announcement would give the SP strength. I am looking forward to seeing the end of this sell off and seeing how the SP does without that pressure.

Of surprise to me (seems to be a recurrent reaction with being an AIR holder) is there has yet to be an SSH notice since the drop from $3.

[Scrunch]

Of surprise to me (seems to be a recurrent reaction with being an AIR holder) is there has yet to be an SSH notice since the drop from $3.
Not really a surprise - There's a heap of institutions with holdings under 5% of the company being held in bank nominee accounts. As they are under 5% they can buy and sell with no announcements. The Crown holding 52% basically compresses the size of everyone else's holdings.

[winner69]

I think some guru analysts have been doing a bit of half year v half year analysis (especially seeing what's happened in H216) and reality checking some of AIRs numbers on their outlook slides.

Conclusion - F17 profitability is totally dependent on fuel costs, growing the top line might be a more difficult task

[Xerof]

Insto's that have made a decision to exit large positions need 'liquidity events' to assist with decent supportive volume. Today was such an event. On top of that, the bad news is always at the back of the announcement, so start on the back page - outlook.

discl: holding most of original purchases - partial selldown @ $2.29 some days ago

[couta1]

Volume today of 14,098,409 shares with a VWAP slightly under $2.21 !

AIR has not seen such as this since the government sell down in November 2013.

I see this has a grand battle between the short-term buyers who read the dividend bit and the those with longer time frames who read all the information.

Best Wishes
Paper Tiger

Disc: I will definitely be issuing a downgrade when I have the time.

http://www.tuxboard.com/photos/2016/08/crash-airlander-10-720x405.jpg Your post is tainted by your long held belief that one should fly with an airline not buy an airline and therefore should be taken with a pinch of catnip. PS-Many of us have read both the dividend bit and the whole report and have longer time frames. PPS-Instos be selling and Instos be buying.

[workingdad]

Insto's that have made a decision to exit large positions need 'liquidity events' to assist with decent supportive volume. Today was such an event. On top of that, the bad news is always at the back of the announcement, so start on the back page - outlook.

discl: holding most of original purchases - partial selldown @ $2.29 some days ago

At some stage they will run out.... should sit down and see how many shares have been traded versus total issued shares over the last few months.... If the govt holds 52 % odd be interesting to see how many times the remainder could have been traded but eventually those wanting leaving the room will be finished and those of us left can relax haha.

[Snow Leopard]

Your post is tainted by your long held belief that one should fly with an airline not buy an airline and therefore should be taken with a pinch of catnip. PS-Many of us have read both the dividend bit and the whole report and have longer time frames. PPS-Instos be selling and Instos be buying.

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

[Raz]

I think some guru analysts have been doing a bit of half year v half year analysis (especially seeing what's happened in H216) and reality checking some of AIRs numbers on their outlook slides.

Conclusion - F17 profitability is totally dependent on fuel costs, growing the top line might be a more difficult task


I think you have a point there winner69.

[percy]

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

Great post.
Thanks for the sage advice.

[fish]

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

Very wise.
But what about as part of a balanced portfolio.
For instance if one held air,nzo,gne,fph,and a retirement village stock,banking .
If oil goes down air goes up and nzo goes down.
We are all going to use electricity-probably more if the population grows and electric cars become mandatory-at least in cities.
We are all going to age and many will be obese and require FPH patented CPAP innovations.
Banks in Australasia make high profits and are low risk

[Beagle]

Volume today of 14,098,409 shares with a VWAP slightly under $2.21 !

AIR has not seen such as this since the government sell down in November 2013.

I see this has a grand battle between the short-term buyers who read the dividend bit and the those with longer time frames who read all the information.

Best Wishes
Paper Tiger

Disc: I will definitely be issuing a downgrade when I have the time.

http://www.tuxboard.com/photos/2016/08/crash-airlander-10-720x405.jpg

You imply that many buyers are only interested in the forthcoming dividend and not looking at the longer term story. Nothing could be further from the truth. I think many people have considered the long term story and very few are persuaded by the large short term dividend, (as nice as that is). Sustainable dividend yield going forward of as much as 14.6% gross is something that might influence many people. I spent most of yesterday looking at the longer term story and gleaning information from the reports, financials and listening in to the conference call. You imply that you have some special insights into the industry that even Chris Luxon and Rob McDonald don't have...based on what ? from you studies since 2015...whatever...

I am 100% certain senior management know a lot more about the airline than you do and am more than comfortable with the long term outlook of this well managed company. A PE of 5.8 based on the mid point of the 2017 forecast more than compensates people for the risk. Many holders are sick of your long term bias against AIR, myself included.

Management are highly regarded in business circles with Rob McDonald for instance winning CFO of the year award at last year's Deloitte top 200 business awards. Tony Carter won Director of the year at the same awards. You don't find people of this calibre easily.

I think there's a place in a well diversified portfolio for AIR. The current management team have executed their strategy extremely well and have dug the company out of the deeply embedded fiasco that is Virgin Australia. They delivered on the promised guidance of over $800m before tax and extraordinary items, (without having to revise it first up and then down three times like for instance Skellerup) and in the same year extricated the company from potentially extremely damaging issues like the cargo cartel case as well as ostensibly extricating themselves from the legacy issue of what was an extremely troubled and in my view systemically flawed operation at Virgin.

Further, they have paid out the full proceeds of the Virgin sale, as I suggested months ago, so they have to run a disciplined growth strategy going forward which hopefully discourages any more fishing expeditions of overseas associate companies.

Nobody seems to have considered that next years earnings of $500m at the mid point of the forecast range is effectively from as asset base that's 20% smaller, ($1.76 NTA as at 30 June 2016 less 35 cps dividends to be paid) = $1.41 NTA so in effect generating that level of profitability from a reduced asset base is a pretty good outlook for the year ahead and as you would have observed if you'd bothered to listen into the conference call FY17 forecast profit if achieved will be the second or third highest profit in the companies 76 year history. Simply put, if people chose to reinvest their 35 cent dividend in the airline they'll be enjoying a much larger share of the $500m pie next year and beyond and that must be a relevant factor in any analysis of future returns.

In conclusion, well done to the team at AIR for a job done extremely well ! I am sure they will keep up the good work in 2017 and beyond. Any valuation you put on the company based on your "extensive analysis" since 2015 is of no interest to this hound who feels very confident in his own ability to sniff out a high quality, good value investment based on vastly more research than since 2015.

AIR is cheap relative to its international peers whatever metric you use and I for one think its at least as well managed, probably considerably better than most.

[percy]

The result was fantastic.
The business is very well run.
For any one looking to invest in AIR it a must read.[And a couple of rereads].
The outlook is sober.
Whether it makes a small part of one's portfolio is for each of us to decide.
However it appears to me that being overweight in AIR is very risky.

[Master98]

Latest Morningstar Recommendation $2.6 Accumulate:

2017 for Air New Zealand Will Be Well Down on 2016’s Peak Cycle Earnings, but It Will Still Be Solid
Air New Zealand reported net profit after tax for fiscal 2016 of NZD 463 million, up 42% on 2015. Underlying NPBT was NZD 806 million, up 70% on 2015. A final fully imputed dividend of NZD 0.10 per share was declared, to total NZD 0.20 for the year, with a surprise fully imputed special dividend of NZD 0.25.

Over the past four years, the firm has focused on improving the customer experience, from aircraft through to improving service and technologies, upgrading lounges, and enhancing its loyalty programme. Its seat capacity management is more flexible, optimising revenue, and every route is profitable. Fleet simplification, focusing on new fuel-efficient technologically advanced aircraft, has led to fuel, operational, and maintenance savings. The company focused on capital management, with pretax ROIC of 22% in 2016. Although 2016 will herald the peak in this cycle, we view the firm as well placed to manage a return to more competitive market conditions, with six new airlines having commenced services to Auckland in the past six months. By 2019, it will complete a six-year NZD 4.8 billion aircraft capital expenditure programme, leading to an average fleet age of less than seven years, with no major spend until the mid-2020s.

Management guided to underlying NPBT of NZD 400 million-NZD 600 million in 2017. We now forecast 2017 underlying NPBT of NZD 532 million, down 34% on 2016, and NZD 419 million in 2018. Gearing ended 2016 at 49%, well within the 45%-55% target. Although we forecast lower operating profits over the next few years, lower capital expenditure should enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle. We revise our fair value estimate to NZD 2.60 per share (from NZD 2.80). At the current price of NZD 2.25, the shares are around 15% undervalued. We reaffirm our no-moat and high uncertainty ratings, reflecting the competitive cyclical nature of the airline industry and its sensitivity to external factors.

[see weed]

Where can I go to listen to the conference call?

[Beagle]

Mid point of the forecast is $500m. If they pay full tax on that, (it's never quite full tax but lets assume it is next year), less 28% ($140m) = $360m / 1,123m shares = 32.06 cps.

Based on yesterday's closing price $2.22 gives a theoretical ex divvy price of ($2.22 - 0.35) = $1.87

1.87 / 0.3206 = PE of 5.83 for FY17 a year in which AIR will be subject to all the effects of increased competition.

Interesting comparison, we have SKL which revised guidance four times last year, has never shown any genuine long term growth over time and currently trades on a forward PE of 13.

But of course of far more relevance is the forward PE of QAN which we can't gauge because they refused to issue guidance but did note increasingly competitive yield pressures.

Sober as a Judge and I can see genuine value here in a market that's widely considered to be trading on very stretched multiples.

Have to agree that taking a very large poorly diversified stake is a very high risk strategy but each to their own and our friend Couta1 will not be eating cold can's of house brand jellymeat anytime in the foreseeable future that's for sure especially not after getting in excess of $120,000 in his next dividend !!!!!!

[Beagle]

Great result today, but still unsure about going forward. Does AIR still have a div reinvestment plan? If so anyone know when they announce the purchase price for that?
No its presently suspended as they have a whopping $1.6 billion in cash at balance date and after balance date on 4 August had another $140 odd million repaid from their shareholder advance to Virgin.
The company is literally swimming in cash hence the special dividend and no need to issue shares under a dividend reinvestment plan but its easy enough to run your own plan and reinvest the dividend buying extra shares which is an extremely good way to boost your future dividend yield. A 14.86% gross return across the cycle, see comment below, would be boosted by 35/222 = 15.77% more shares for those that chose to reinvest thereby generating a future sustainable gross yield of 14.86 x 1.1577 = 17.2% going forward. Of course you'll have contend with the naysayers who think management don't have a clue what they're talking about and something this outrageously good couldn't possibly happen.


Latest Morningstar Recommendation $2.6 Accumulate:

2017 for Air New Zealand Will Be Well Down on 2016’s Peak Cycle Earnings, but It Will Still Be Solid
Air New Zealand reported net profit after tax for fiscal 2016 of NZD 463 million, up 42% on 2015. Underlying NPBT was NZD 806 million, up 70% on 2015. A final fully imputed dividend of NZD 0.10 per share was declared, to total NZD 0.20 for the year, with a surprise fully imputed special dividend of NZD 0.25.

Over the past four years, the firm has focused on improving the customer experience, from aircraft through to improving service and technologies, upgrading lounges, and enhancing its loyalty programme. Its seat capacity management is more flexible, optimising revenue, and every route is profitable. Fleet simplification, focusing on new fuel-efficient technologically advanced aircraft, has led to fuel, operational, and maintenance savings. The company focused on capital management, with pretax ROIC of 22% in 2016. Although 2016 will herald the peak in this cycle, we view the firm as well placed to manage a return to more competitive market conditions, with six new airlines having commenced services to Auckland in the past six months. By 2019, it will complete a six-year NZD 4.8 billion aircraft capital expenditure programme, leading to an average fleet age of less than seven years, with no major spend until the mid-2020s.

Management guided to underlying NPBT of NZD 400 million-NZD 600 million in 2017. We now forecast 2017 underlying NPBT of NZD 532 million, down 34% on 2016, and NZD 419 million in 2018. Gearing ended 2016 at 49%, well within the 45%-55% target. Although we forecast lower operating profits over the next few years, lower capital expenditure should enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle. We revise our fair value estimate to NZD 2.60 per share (from NZD 2.80). At the current price of NZD 2.25, the shares are around 15% undervalued. We reaffirm our no-moat and high uncertainty ratings, reflecting the competitive cyclical nature of the airline industry and its sensitivity to external factors.


I think they meant to say N.Z. 20 cps across the cycle, that's the same impression I gathered from the conference call discussions, 20 cents fully imputed = 27.78 cps gross and on a theoretical ex divvy price of $1.87 ($2.22 - 0.35), management strongly implied a sustainable gross dividend yield going forward across the cycle of 14.86%...yeah that's a shockingly unrewarding investment LOL


Where can I go to listen to the conference call?
http://edge.media-server.com/m/p/xc9rxi7z/r/1
There you go mate.

[winner69]

Where can I go to listen to the conference call?
http://edge.media-server.com/m/p/xc9rxi7z/r/1

Pretty boring but if you have an hour go for it

[Beagle]

http://edge.media-server.com/m/p/xc9rxi7z/r/1

Pretty boring but if you have an hour go for it

Its called doing your homework properly, something more people around here should do, (not aimed at you mate)

[see weed]

Thank you all. Will listen to it while doing the house work. I suppose I should spend an hour seen as they are paying me big div.

[percy]

We certainly live in interesting times with AIR.
I would have thought the result would have given us all the answers we were wanting for.
Yet the share price has not made up its mind.?Now that surprises me considering that massive volume that went through yesterday.
The sp was $2.22 at close of trading on Friday night 26/08/2016..
I note this is under ;
the 50 day EMA $2.23
the 100 day EMA $2.32
the 200 day EMA $2.45
the 400 day EMA $2.47.

[Beagle]

And will stay that way for a while seeing as its going to shed a 35 cent divvy shortly. There's been a dichotomy between FA and TA indicators for quite some time now so nothing new there.

What some people seem to struggle to understand is that even if profit halved from FY17 projected $500m before tax AIR would even then only be trading on its 10 year average PE. Its actually pretty basic, the risks are more than compensated by the ultra low forward PE....bizarre that this simple facts seems to be lost on some people who seem to be on something of a personal crusade to point out the risks of airline investment.

Further to post #8163 paragraph 1, some extremely cunning people might even work out what their forthcoming dividend is going to be an reinvest that dividend before it goes ex, thereby getting an even bigger dividend and boosting one's gross sustainable forecast dividend yield beyond 17.2%. Such investors could be said to be extremely cunning dividend hounds :)

Disc: Currently sitting at 10% of my portfolio, will be reinvesting my forthcoming dividend before AIR goes ex divvy to compound my future expected returns.

[couta1]

The result was fantastic.
The business is very well run.
For any one looking to invest in AIR it a must read.[And a couple of rereads].
The outlook is sober.
Whether it makes a small part of one's portfolio is for each of us to decide.
However it appears to me that being overweight in AIR is very risky. Getting up in the morning is risky,skiing at high speed is risky, fishing in rough seas is risky,a bit of high speed driving in a high horsepower car is risky, being overweight in Air is risky but i love all of these things and its risk that makes life more meaningful.

[percy]

Getting up in the morning is risky,skiing at high speed is risky, fishing in rough seas is risky,a bit of high speed driving in a high horsepower car is risky, being overweight in Air is risky but i love all of these things and its risk that makes life more meaningful.

What a fantastic reply.
Yes I can understand AIR is an appropriate share for you.
Meets your risk profile exactly.!!..lol.

[see weed]

And will stay that way for a while seeing as its going to shed a 35 cent divvy shortly. There's been a dichotomy between FA and TA indicators for quite some time now so nothing new there.

What some people seem to struggle to understand is that even if profit halved from FY17 projected $500m before tax AIR would even then only be trading on its 10 year average PE. Its actually pretty basic, the risks are more than compensated by the ultra low forward PE....bizarre that this simple facts seems to be lost on some people who seem to be on something of a personal crusade to point out the risks of airline investment.

Further to post #8163 paragraph 1, some extremely cunning people might even work out what their forthcoming dividend is going to be an reinvest that dividend before it goes ex, thereby getting an even bigger dividend and boosting one's gross sustainable forecast dividend yield beyond 17.2%. Such investors could be said to be extremely cunning dividend hounds :)

Disc: Currently sitting at 10% of my portfolio, will be reinvesting my forthcoming dividend before AIR goes ex divvy to compound my future expected returns.
Your last paragraph sounds like a good idea. And to add to that,they should start a new ruling, that you can only sell up to 20% of your holding within 4 weeks of ex div date. That might help stabilize sp. eg. If I buy 100,000 shares just to get the div., then I can only sell 20,000 within the next 4 weeks after ex div.

[Bobdn]

Very wise.
But what about as part of a balanced portfolio.
For instance if one held air,nzo,gne,fph,and a retirement village stock,banking .
If oil goes down air goes up and nzo goes down.
We are all going to use electricity-probably more if the population grows and electric cars become mandatory-at least in cities.
We are all going to age and many will be obese and require FPH patented CPAP innovations.
Banks in Australasia make high profits and are low risk

I take this approach. When oil goes up I'm happy for my BHP, GNE and ANZ shares. When it goes down I'm happy for my AIR shares. If I had to choose, I'm kind of hoping oil goes over $100 US a barrel. Sorry Air ;)

[biker]

Getting up in the morning is risky,skiing at high speed is risky, fishing in rough seas is risky,a bit of high speed driving in a high horsepower car is risky, being overweight in Air is risky but i love all of these things and its risk that makes life more meaningful.

Now that makes perfect sense. What a great philosophy.

[King1212]

Getting up in the morning is risky,skiing at high speed is risky, fishing in rough seas is risky,a bit of high speed driving in a high horsepower car is risky, being overweight in Air is risky but i love all of these things and its risk that makes life more meaningful.


Even having sex is risky....pregnancy ..lol....:cool:..welcome to the share market...

[skid]

Your last paragraph sounds like a good idea. And to add to that,they should start a new ruling, that you can only sell up to 20% of your holding within 4 weeks of ex div date. That might help stabilize sp. eg. If I buy 100,000 shares just to get the div., then I can only sell 20,000 within the next 4 weeks after ex div.

and they could impose a tax on all foreign owned airlines...but it aint gonna happen.
What we are all learning (including our friend who is addicted to risk) is that there is no free money,Divey or otherwise.--What goes out as a divey,reduces the value of the company and may well come off the share price(we'll see)--The PE ratio represents this sweet period AIR has just had--Earnings are the future--they will be dependent on how much of the market AIR will be able to hold onto (with its expensive,''premium airline''strategy--What is Joe public getting in return?)
This quandary is what (imo) we are seeing,being played out at this stage.
What is in store for the future--Will AIR revert back to the $1.30(3yrs back) or $1.70 (2 years back)
Or will it rocket back to the sweet days of not much competition and cheap oil.
Those of us that have gotten used to the ''pushing $3 days'' may be using that as a yard stick--Those who remember the $1.30 days may have a different outlook.
Some think that if you sit on any stock for a long time it will come right(inflation) and life has no meaning without (reckless?)risk....We all decide for ourselves

[Raz]

This is why Percy prefers having sex with himself......there's less risk and he's always "well positioned". :eek2:

All I will say is I'm surprised by some of the personalities on here are actually keen on shares:-) Friday night here and about to take my chances on the pacific coast highway. Wish me luck or can I risk mange it.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700939

[winner69]

Qantas /AIR NZ agree on something - Welington runway extension

"Both Qantas and Air New Zealand opposed the project, along with the Board of Airline Representatives"

[skid]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700939



With a warning..

Air New Zealand is warning of a sharp drop in underlying earnings in the current year as competition intensifies, after reporting a record profit for the past 12 months.

[winner69]

With a warning..

Air New Zealand is warning of a sharp drop in underlying earnings in the current year as competition intensifies, after reporting a record profit for the past 12 months.

So next year be less than phenomenal

Just bloody good

[Snow Leopard]

I must say that parts of his numerous posts was rather like being savaged by a dead sheep (https://en.m.wikiquote.org/wiki/Denis_Healey)

Best Wishes
Paper Tiger

[kiora]

Qantas /AIR NZ agree on something - Welington runway extension

"Both Qantas and Air New Zealand opposed the project, along with the Board of Airline Representatives"

Out of self interest as it would allow other airlines,Singapore,others? to compete for OE from Wellingtonians and surrounding areas

[winner69]

Out of self interest as it would allow other airlines,Singapore,others? to compete for OE from Wellingtonians and surrounding areas

Out of self interest (and for economic reasons and for the sake of the environment) one of those submissions opposing the extension was mine

[Beagle]

So next year be less than phenomenal

Just bloody good

Nice one mate.


Out of self interest (and for economic reasons and for the sake of the environment) one of those submissions opposing the extension was mine
Can't impede the progress of Couta1's flash new boat enjoying fishing in the harbour can we :)

[RTFQ]

Qantas /AIR NZ agree on something - Welington runway extension

"Both Qantas and Air New Zealand opposed the project, along with the Board of Airline Representatives"


Please correct me if wrong, but I understand that the owners of Wellington airport are regulated with a return proportional to the capital value. Get the public to pay for a substandard Runway End Safety Area and they can extract a higher return proportional to the increased capital value. Long haul international flights to Wellington,"" YEA RIGHT""

[winner69]

Now full year out will there be another round of selling by Luxon and his team

That might be an indication if $2 .22 is a 'good' price or not

You never know - they might be queuing up to buy tomoorow (assuming the trading window is open)

[Beagle]

Now full year out will there be another round of selling by Luxon and his team

That might be an indication if $2 .22 is a 'good' price or not

You never know - they might be queuing up to buy tomoorow (assuming the trading window is open)

Window normally opens 1 trading day after the release of the financials. If I remember correctly Tony Cater and another director were buying at the last opportunity before trading window closed in the 220's somewhere.

I've been thinking about their ability to pay sustainable dividends of 20 cps per annum going forward in terms of their balance sheet strength and future net capex, (obviously satisfactory future earnings are also required).

Noted in accounts progress payments on new aircraft $420m. Will help towards $2.1b in capex over the next 5 years. In fact reflecting on my earlier post where I outlined net capex, excerpt reproduced below (real new capex after ordinary expected depreciation), you can see that the next 3 years which is the final hurdle to jump in the fleet replacement programme before their average age of aircraft comes down to a very low age of only 6.2 years), average age world-wide according to IATA is 9.9 years, we can see that the next 3 years total net effective capex is $370m but they have deposits on aircraft on order of $420m so in effect the company in terms of payments remaining on fleet modernisation programme the company has a net negative new capex payments required over the next 3 years of $50m ! Oh joy, here I was thinking they might struggle over the next 3 years a bit with peak cycle capex but of course I initially forgot to factor in existing progress payments on new aircraft already made. The $420m deposits is hugely relevant.

After Fy19 as noted earlier in my posts and as shown below they're really in "free cash flow clover" then in terms of free cash flow with effectively hundreds of millions of dollars per annum of net negative capex for 5-6 years.
Conclusion: Subject to satisfactory profitability in terms of their balance sheet strength and gearing and future capex The company appears to be very well positioned to pay high sustainable dividends going forward especially seeing as they had $1.6 billion in cash at balance date, and a further ~$140m odd repaid from their shareholder loan to Virgin on 4 August.

2017 $660m Est Depn $500m Net Capex $160m
2018 $700m Est Depn $520m Net Capex $180m
2019 $570m Est Depn $540m Net Capex $30m
2020 $150m Est Depn $560m Net Capex $(410m)
2021 $30 m Est Depn $560m Net Capex $(530m)


Conclusion, although a high risk stock this is a dividend hounds dream with projected gross dividend yield in the high teens (percent per annum) and it appears to be sustainable going forward subject only to reasonable level's of profitability.

Another minor little little tidbit from the accounts, in addition to taking a charge on the sale of their stake in Virgin they wrote down their remaining stake to 20.5 cps and expensed this within the accounts.
They subscribed for their 1:1 entitlement at 21 cps so they now have a stake of 2.5% or 205.8m shares valued at 20.75 cps in their balance sheet. Future gains or losses around the carrying value are to be included or expensed as other income other expense.

As at Friday 26th, (reporting day) when Virgin closed at 23.5 cps, if AIR's stake was marked to market (which it will be each balance date) they are presently sitting on an unrealised gain of $A5.66m.

[winner69]

I must say that parts of his numerous posts was rather like being savaged by a dead sheep (https://en.m.wikiquote.org/wiki/Denis_Healey)

Best Wishes
Paper Tiger

...even worse than "being savaged by a pet lamb"

But in fairness to him we should keep baa_baa out this critique of a fellow poster's posts

[winner69]

Look at the bottom of this page to see how many people are reading this thread. 120 who are not even members.

No doubt AIR investor Relations lurking to get an idea of how the result is seen

[winner69]

Thank you all. Will listen to it while doing the house work. I suppose I should spend an hour seen as they are paying me big div.

Pretty matey with the analysts aren't they

I like the several references to 'remember what we said to you on that investor day' (a few months ago) - nudge nudge wink wink you are special guys

And the likes of couta et al have to work things out or themselves 2nd and 3rd hand

[skid]

Window normally opens 1 trading day after the release of the financials. If I remember correctly Tony Cater and another director were buying at the last opportunity before trading window closed in the 220's somewhere.

I've been thinking about their ability to pay sustainable dividends of 20 cps per annum going forward in terms of their balance sheet strength and future net capex, (obviously satisfactory future earnings are also required).

Noted in accounts progress payments on new aircraft $420m. Will help towards $2.1b in capex over the next 5 years. In fact reflecting on my earlier post where I outlined net capex, excerpt reproduced below (real new capex after ordinary expected depreciation), you can see that the next 3 years which is the final hurdle to jump in the fleet replacement programme before their average age of aircraft comes down to a very low age of only 6.2 years), average age world-wide according to IATA is 9.9 years, we can see that the next 3 years total net effective capex is $370m but they have deposits on aircraft on order of $420m so in effect the company in terms of payments remaining on fleet modernisation programme the company has a net negative new capex payments required over the next 3 years of $50m ! Oh joy, here I was thinking they might struggle over the next 3 years a bit with peak cycle capex but of course I initially forgot to factor in existing progress payments on new aircraft already made. The $420m deposits is hugely relevant.

After Fy19 as noted earlier in my posts and as shown below they're really in "free cash flow clover" then in terms of free cash flow with effectively hundreds of millions of dollars per annum of net negative capex for 5-6 years.
Conclusion: Subject to satisfactory profitability in terms of their balance sheet strength and gearing and future capex The company appears to be very well positioned to pay high sustainable dividends going forward especially seeing as they had $1.6 billion in cash at balance date, and a further ~$140m odd repaid from their shareholder loan to Virgin on 4 August.


Conclusion, although a high risk stock this is a dividend hounds dream with projected gross dividend yield in the high teens (percent per annum) and it appears to be sustainable going forward subject only to reasonable level's of profitability.

Another minor little little tidbit from the accounts, in addition to taking a charge on the sale of their stake in Virgin they wrote down their remaining stake to 20.5 cps and expensed this within the accounts.
They subscribed for their 1:1 entitlement at 21 cps so they now have a stake of 2.5% or 205.8m shares valued at 20.75 cps in their balance sheet. Future gains or losses around the carrying value are to be included or expensed as other income other expense.

As at Friday 26th, (reporting day) when Virgin closed at 23.5 cps, if AIR's stake was marked to market (which it will be each balance date) they are presently sitting on an unrealised gain of $A5.66m.

So its ''subject to reasonable levels of profitability'' vs ''Air New Zealand is warning of a sharp drop in underlying earnings''----Is a sharp drop still a reasonable level of profitability?--I guess that is the question.
I think it would be a stretch to think we will go back to the ''pushing $3'' level ,given that Air New Zealand themselves are warning us of a ''sharp drop'' in earnings.---Thoughts?
(If only PEB and some others would be so forthcoming with their information)

[Snow Leopard]

It is at least nine years since I have flown with Air New Zealand, though I did see one of their jets queueing for takeoff at Shanghai in February.

But I was reminded this evening that they used to, and I now presume still do, offer boiled sweets to their passengers prior to landing.

As I was walking through Singapura Plaza Mall I spied a bunch of black and purple balloons (the balloons were either purple or black, except for the writing, there were no multi-coloured balloons) with "Air New Zealand" written on them coming towards me. The balloons were being carried by one of two young woman, both wearing black Koru logoed T-shirts, and on noticing that I had noticed them I was offered, and accepted, a boiled sweet from the second.

So when I redo my analysis next week my valuation will be increased by 1c due to the 'effective marketing' that Air NZ are undertaking.

It could have been a 5c increase but I failed to obtain a balloon.

Best Wishes
Paper Tiger

[winner69]

Even though part of his posts might be like 'being savaged by a dead sheep' Roger does make some good points, esp around future cash flows

While we get hung up on earnings and PE ratios and all that sort of stuff how much cash a company can generate essentially dictates it value

A few months ago somebody did ask 'how the hell can you value AIR when it has had negative free cash flows for so many years?'. (Free cash flow being operating less investment (capex) cash flows)

F15 was marginally +ve but F16 was +$270m - and from analyst meeting and from what Roger has outlined these free cash flows are going to be very solid going forward - AIR management use the word sustainable a lot in spite of competitive environment and all that stuff.

Bottom line is minimum 20 cent / 25 cent dividend for some time - even with no growth that supports a price of $2.00 / $2.50 (assuming cost of equity of 10% but don't really know if it really is this high)

So in those posts that 'savage like a dead sheep' there is some mongrel

[winner69]

It is at least nine years since I have flown with Air New Zealand, though I did see one of their jets queueing for takeoff at Shanghai in February.

But I was reminded this evening that they used to, and I now presume still do, offer boiled sweets to their passengers prior to landing.

As I was walking through Singapura Plaza Mall I spied a bunch of black and purple balloons (the balloons were either purple or black, except for the writing, there were no multi-coloured balloons) with "Air New Zealand" written on them coming towards me. The balloons were being carried by one of two young woman, both wearing black Koru logoed T-shirts, and on noticing that I had noticed them I was offered, and accepted, a boiled sweet from the second.

So when I redo my analysis next week my valuation will be increased by 1c due to the 'effective marketing' that Air NZ are undertaking.

It could have been a 5c increase but I failed to obtain a balloon.

Best Wishes
Paper Tiger

Some $350m of marketing money goes a long way

But didn't your mum tell you not to accept sweets from strangers - jelly meat yes but boiled sweets a no no

[see weed]

So where to from today? Up, down or sideways. Maybe friends of shareholders piling in today on hearing all about the big div payout:). 20c in future divs are pretty good, better than the bank.

[workingdad]

So where to from today? Up, down or sideways. Maybe friends of shareholders piling in today on hearing all about the big div payout:). 20c in future divs are pretty good, better than the bank.

a million shares already traded with a vwap of 2.246 so I think it will be similar to Friday but perhaps end positive (that's where the dart landed on the board during my assessment)

[Raz]

So where to from today? Up, down or sideways. Maybe friends of shareholders piling in today on hearing all about the big div payout:). 20c in future divs are pretty good, better than the bank.

Not sure... all that is certain is that i'm going out for lunch....god willing. I'm guessing more supply to come online for any demand that occurs.


I will say i appreciate all the comments here including Rodgers, the greatest gift you can give is your time and energy and I really do appreciate it..even if I do not agree.

I'm look at this share more and more as an investment rather than a trading share.

[see weed]

And don't forget the shut off day for big div. pay out is 5pm.Wed. 7/9/16:t_up:.

[BlackCross]

"...We now forecast 2017 underlying NPBT of NZD 532 million, down 34% on 2016, and NZD 419 million in 2018. Gearing ended 2016 at 49%, well within the 45%-55% target. Although we forecast lower operating profits over the next few years, lower capital expenditure should enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle. We revise our fair value estimate to NZD 2.60 per share (from NZD 2.80). At the current price of NZD 2.25, the shares are around 15% undervalued. ...."

Today's MorningStar via ASB...

[Beagle]

So its ''subject to reasonable levels of profitability'' vs ''Air New Zealand is warning of a sharp drop in underlying earnings''----Is a sharp drop still a reasonable level of profitability?--I guess that is the question.
I think it would be a stretch to think we will go back to the ''pushing $3'' level ,given that Air New Zealand themselves are warning us of a ''sharp drop'' in earnings.---Thoughts?
(If only PEB and some others would be so forthcoming with their information)

$500m the mid point of their forecast range gives 32 cps after tax. The reason for my work on free cash flow and capex was to establish whether the company is in a position to pay 20 cps in dividends going forward. $400m, the bottom end of their forecast range gives 25.6 cps. They have the balance sheet strength to pay that dividend for the foreseeable future and they're already broadly in a neutral new capex position relative to depreciation taking into account progress payments already made on new aircraft so perhaps the question is why wouldn't they ? Obviously the Government like their share of cash, (its not an accident they paid out the full proceeds of the Virgin sale). Interestingly on your last point Qan declined to give a profit forecast and last year the company didn't give a half year forecast until the annual meeting at the end of Sept, so as you say its a good thing that they're being so forthcoming so early in the year but people I am sure can understand because its so early in the year they had to give a wide range to account for a wide variety of possible future scenario's, hence the $400 - $600m.

Winner you are absolutely right. This pure bred hound has had to endure listening to highly experienced investors bleating for years that AIR can never make money because of their high current and future capex....to the point where it made my ears hurt. Those investors don't seem to have been able to understand the basic's that AIR are thoroughly modernising their fleet, go figure ?

Now I've shown their capex is broadly neutral for the next 3 years and then we can subsequently look forward to approx half a decade of tremendous cash flow with minimal capex its funny how they've gone quiet isn't it.

If Raz one of our favourite resident horse traders is looking at this stock more and more as an investment maybe long term investment in this airline isn't as crazy as it sounds after all.

[winner69]

"...We now forecast 2017 underlying NPBT of NZD 532 million, down 34% on 2016, and NZD 419 million in 2018. Gearing ended 2016 at 49%, well within the 45%-55% target. Although we forecast lower operating profits over the next few years, lower capital expenditure should enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle. We revise our fair value estimate to NZD 2.60 per share (from NZD 2.80). At the current price of NZD 2.25, the shares are around 15% undervalued. ...."

Today's MorningStar via ASB...

key bit is .....enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle

[Raz]

key bit is .....enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle

That well may be only a few words however to be in a position to achieve that with an airline is quite unique and an excellent return.

[Beagle]

key bit is .....enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle

Sure they meant Kiwi 20 cents but yeah..this is pretty unique in the airline industry so makes HLG and AIR almost dead heat first equal on the NZX for highest forecast dividend yield...guess I must be a glutinous hound at heart as I hold both :)

[winner69]

Sure they meant Kiwi 20 cents but yeah..this is pretty unique in the airline industry so makes HLG and AIR almost dead heat first equal on the NZX for highest forecast dividend yield...guess I must be a glutinous hound at heart as I hold both :)

In that analyst web cast Rob let slip NZ25 cents before checking himself and saying something around 20 cents ......or something like that

[Beagle]

An exchange rate over $U.S.70c lowers their balance sheet footings in terms of overseas debt and capitalised lease obligations and will improve their gearing.
Again reported in the NBR that their capex is just over $2b in the next few years but as previously mentioned this is only circa $600 - $700m more than the normal rate of fleet depreciation over that timeframe so net capex is really not such a frightening figure at all especially viewed in the context that they had paid $520m in aircraft deposits already as at 30 June 2015.

Further, we know this is the peak of the earnings cycle. Provided the VAH sale gets the necessary Chinese authorities approval I think we can take it as a given that there will be a special dividend this year, (management were stung by shareholder criticism that there wasn't one last year and I am sure they don't want widespread contempt to reveal itself at the next annual meeting) and there is the very real prospect it'll be bigger than the usual 10 cps paid in various years in the past. The sale proceeds by my calculations, (again not relying on media reports) are 25 cents Kiwi per share less transactions costs so taking into account its been a record year for profit anyway with low oil prices and the fairly miserable interim dividend I see no reason why they can't pay the lot out but they probably won't. Management will probably have some "highly desirable" environmentally friendly pet project they want to fund so maybe us lowly shareholders, (you know the poor sods that they're actually supposed to be running this business for) might be lucky to get a special of 10 - 15 cps ?

Prospects for a final dividend. I think 10-12 cps. Best guess of total, 20-27 cps..risk is probably skewed slightly to the upside. Full imputation credits will apply to dividend(s) paid, that's the one and only thing you can be absolutely certain of.

For 10 June 2016. Pleased to be proven wrong and very pleased they paid the lot out. Wonder what influence the majority shareholder had in this decision if any ? Make Govt's FY17 books look better in the run up to the election. Very happy to be partnering with the Govt on this occasion and happy for my books too :)

[BlackPeter]

key bit is .....enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle

Isn't another key bit that its not unheard of that MorningStar gets it wrong?

Sure, you can't rely on that either ... but anybody promising a sustainable dividend over several years in an industry so dependant on economic cycles, fuel prices low, (pilots, ground staff, air controller, border control staff) strikes (or the lack thereof), terrorists playing it nicely, war parties not taking down civil planes, viruses stopping to mutate, pilots controlling their mental illnesses, volcanoes remaining calm must have a truly amazing crystal ball!

In the last seven years AIR had only three years (the last three) where EPS was above 20 cents (which would be sort of a minimum requirement for a sustainable dividend of 2-0 cents pa):

2016 41 cts
2015 29 cts
2014 24 cts
2013 17 cts
2012 7 cts
2011 8 cts
2010 8 cts

OK - so, this is a cyclical industry, competition is heating up, AIR have no moat whatsoever, major cost factors (fuel) are outside of their control as is the demand (which goes off the discretionary budget of most travellers). And MorningStar claims that they will be able to sustain-ably pay a dividend which is higher than the average EPS over the last 7 years?

Hmm ...

[see weed]

And don't forget the shut off day for big div. pay out is 5pm.Wed. 7/9/16:t_up:.
Forgot to mention all the mum and dad investors saving up to buy a rental, and hearing about all these big divs. coming up, might think, wow, lets buy some AIR in the meantime to boost our savings:).

[winner69]

A year ago share price about 250 after announcing earnings of 29 cents and dividend of 9.5 cents

Today share price is 225 - eps of 51 cents and dividends of 35 cents

Market sentiment towards AIR really really bad - PE fallen from 8.6 to 4.4

Market never gets wrong?

[BlackPeter]

Kind of convenient for you that many of those years the airline industry was still recovering from the effects of the GFC.


I would have thought that 7 years is a quite appropriate period to look at for a cyclical industry. As well - while I am not a supporter of the latest doomsday theory (whatever it is), would I think it would be quite prudent to expect during any 7 to 10 year period some sort of downturn (strictly looking into the future:p) - so whats the problem with picking 2010 to 2012 together with 2013 to 2016)?;



Myopic negative backward looking vision opining without any meaningful research is getting very old...
I get it that you only like buying airlines right at the bottom of the cycle and I am pretty sure everyone else has got that too.

Hmm - I think you start to take this discussion a bit too personal. If you feel the need to put down your fellow posters just because you don't like what they say, than maybe it is time to assess whether you've fallen in love with your share? Not a recommended practise ;);

If I look at the market - it currently seems to be sitting on the fence. Sure - there are lots of people who think the share is undervalued (I suppose that's the people buying), but there seems to be a similar number of people thinking it is overvalued (that's the sellers) - if these people wouldn't balance, the SP would rise (or drop).

Are you sure, you don't want to know what the other half is thinking?

[Beagle]

Forgot to mention all the mum and dad investors saving up to buy a rental, and hearing about all these big divs. coming up, might think, wow, lets buy some AIR in the meantime to boost our savings:).

Funny you bring that up. I got to thinking over the weekend about my clients that still own their Auckland rental properties.
On an average price of about $900K if the tenant pays 52 weeks rent and if they don't do major damage or start a P lab an average investor might expect to earn circa $20K after known cash flow expenses, about $400 per week after heinous rates and insurance costs. That diminishes further when one takes into account regular maintenance required as well as a share of deep cycle maintenance approx. every ten years, full repaint and refurbishment inside and out which often runs to $40 - 50K, so after allowing for a one tenth share of deep cycle maintenance every ten years for all the investors hard work managing the property they might get a real return after costs and provisions of $15K less tax at 33% gives them $10K net.

On the other hand if one were to invest $900K in AIR shares at $2.25 - 0.35 expected divvy = theoretical ex divvy price of ~ $1.90 they'd buy `$474K shares and be looking at tax paid sustainable returns of ~95K per year for no work and no risk of a P lab....and yet some people think those taking a large poorly diversified position in AIR are crazy...I'll tell you who the crazy ones are hoping they'll get even fatter on further house price increases... One investment buys you a very small return for a lot of work and the other a comfortable retirement for no work. Hmmm

[see weed]

Went out to the airport yesterday to check out AIR, making sure they are all working hard. And yes they were all hard out at the grindstone. Counted 30 AIR planes taking off or landing, that was about one plane every 3 minutes. Keep it up AIR you little beauty:t_up:.

[winner69]

One analyst the other day asked whether AIR do/would fly any international sector at a loss for a while if they had to

I think it was Rob who said it was just a few years ago AIR weren't profitable internationally and they have come. Long way. Reading between the lines I got the impression they would be prepared to lose money on a couple of key sectors so they were still around to make heaps when the competition pulled out because it was just too competitive - thats forward thinking with an eye to sustainable dividends in the future.

[Balance]

This little fish had a wee nibble at $2.17 :D

Well done!

[Balance]

Share price has dropped. Happy to have sold most of my holding around 2.20 prior to the announcement.
Far too many moving parts in the cyclical airline business.

A bit early?

[Biscuit]

... I got the impression they would be prepared to lose money on a couple of key sectors so they were still around to make heaps when the competition pulled out because it was just too competitive - thats forward thinking with an eye to sustainable dividends in the future.

No, that's part of the problem with the airline industry

[bull....]

looking like wants to break out 2.27 resistance could give

[Marilyn Munroe]

One analyst the other day asked whether AIR do/would fly any international sector at a loss for a while if they had to


In Ancient Rome when the homeland came under pressure they thinned out garrisons on the distant frontier.

So to will American Carriers when they come under pressure in the homeland. To their minds AKL and the barbarian tribe called Cullen Airlines are part of a distant frontier.

Boop boop de do
Marilyn

[workingdad]

Seems a lot of debate on AIR. Should we do a poll on SP ex divvy.

I think SP with be 2.35 to 2.40 prior and drop to 2.05 to 2.10 range ex.

Let me know if there's interest and I will start one

[Bobdn]

looking like wants to break out 2.27 resistance could give

There she blows?

[Beagle]

BP - generally I think you make some very worthwhile contributions to the forum but in this thread I think you're focusing more on the pure cyclical nature of the industry without making much of an effort to understand the changes and developments within the company and how C.L. and the team have moved the game on. Generally I have good regard for your posts but on this occasion we'll have to agree to disagree.

I'd speculate Couta1 is probably a bit over people telling him he's crazy to take such a huge stake in AIR too, hence my musings on Auckland property investors, post #8213 oh and BTW selling SCL at $3.55 and buying more AIR at $2.17 last week doesn't look too shabby of a switch idea to me.

[Raz]

One analyst the other day asked whether AIR do/would fly any international sector at a loss for a while if they had to

I think it was Rob who said it was just a few years ago AIR weren't profitable internationally and they have come. Long way. Reading between the lines I got the impression they would be prepared to lose money on a couple of key sectors so they were still around to make heaps when the competition pulled out because it was just too competitive - thats forward thinking with an eye to sustainable dividends in the future. Currently understand they are all profitable...if it gets tough AA will leave the Auk-lax sector, they are already under stress as a company in the overall market and Qantas can't match until it has its 787s and some cases with fuel prices going up can't fly the old crates around for much longer. China and Asia is tougher to compete however while the market is growing they don't need to win every market...just a fair share :)

[keerti]

First Post...so please be kind!

Layman's view....This is already end of August and I am sure Management has very good picture of booking/cost etc until end of January (assuming most of the holiday bookings done). Basically for next financial year risk factor is 5 months Feb-June. I am pretty confident 500mn can be easily achieved based on these assumptions.

Holding tight and planning to re-invest dividend back.

Thanks all for the inputs.

[Beagle]

Welcome to the forum keerti. I had a good look at forward bookings, as you probably realise they're disclosed as a liability in the balance sheet as they're technically unearned income as at 30 June 2016. Nothing wrong with the level of forward bookings from what I can see and as you quite correctly say senior management are the ones best placed to have insights into how things are looking / tracking this year.

Naysayers just concentrating on the negative aspects of the indsutry, not thinking about the significant extras efficiencies of running 9 new ultra efficient dreamliners this year, none of which need deep cycle maintenance for the first nine years of ownership ! They're tremendous cash flow machines just like this company is :)

[mikeybycrikey]

Isn't another key bit that its not unheard of that MorningStar gets it wrong?

Sure, you can't rely on that either ... but anybody promising a sustainable dividend over several years in an industry so dependant on economic cycles, fuel prices low, (pilots, ground staff, air controller, border control staff) strikes (or the lack thereof), terrorists playing it nicely, war parties not taking down civil planes, viruses stopping to mutate, pilots controlling their mental illnesses, volcanoes remaining calm must have a truly amazing crystal ball!

In the last seven years AIR had only three years (the last three) where EPS was above 20 cents (which would be sort of a minimum requirement for a sustainable dividend of 2-0 cents pa):

2016 41 cts
2015 29 cts
2014 24 cts
2013 17 cts
2012 7 cts
2011 8 cts
2010 8 cts

OK - so, this is a cyclical industry, competition is heating up, AIR have no moat whatsoever, major cost factors (fuel) are outside of their control as is the demand (which goes off the discretionary budget of most travellers). And MorningStar claims that they will be able to sustain-ably pay a dividend which is higher than the average EPS over the last 7 years?

Hmm ...

I think what's going on here is that AIR is saying "this time is different" and "it's the end of boom and bust".

It does look like they are aiming for a sustainable dividend of 20 cps in the medium term which is promising. I will be interested to see how successful they are at keeping profit and dividend up in the next downturn, especially given that aviation has notoriously slim margins.

Only AIR management know what policies they have in place to keep profit high and only time will tell if the policies really are effective.

In a volatile business like aviation, the market will come to appreciate a consistent profit and dividend with time.... but only if AIR can achieve it. 2 years of high profits (in a time of low oil and high tourism growth) doesn't change a history of volatility.

But if they keep things consistent then the SP and PE will rise over time. Prove you're consistent and the benefits will follow. We shouldn't just take it on faith from management and believers that this time is different though.

[see weed]

Welcome aboard keerti. Roger and keerti have both made statements that I have not factored in. How many shareholders will be reinvesting their divies not only after ex date, but also before ex date as Roger mentioned a couple of days ago. So if sp does go back down to $2 with 10%ish yld, then investors will come back in and push it up again. So just sit tight and enjoy the ride:cool:.

[Beagle]

This forum not the only place where there's a full and frank expression of differing views. Just look at the volume on Friday and today !

[winner69]

Went out to the airport yesterday to check out AIR, making sure they are all working hard. And yes they were all hard out at the grindstone. Counted 30 AIR planes taking off or landing, that was about one plane every 3 minutes. Keep it up AIR you little beauty:t_up:.

see weed - had lunch down on the beach in the sun today - juicy scallops and chips (no oysters in stock) and watched AIRplanes come into WLG

Only seemed to be the small ones at that time of day -bet you load factor was over 95%

[Fox]

My view is that Air NZ is a fantastic company that has a superb marketing team and strong management at present, whom are not afraid to make the big decisions e.g. VAH stake. I believe their CapEx model over this cycle high is sensible as they will create one of the youngest fleets in an environment with low interest rates resulting in a low cost of capital. They are extremely well positioned against any fluctuations in oil due to the efficient nature of their fleet e.g. 787's, and their optimisation of cheap capital, which will see them out compete on a return basis compared to others in the long run. This helps to achieve a more normalised return across the whole industry cycle by raising gross profit at the bottom due to lower fuel costs and capital expenditure, yet still able to deliver strong results at the top.

Right now we are seeing massive gains in most airlines because of the combination of cheap fuel, low interest rates and high tourism/migration numbers, which will see any well run airline boom. New routes and more planes are being brought on board to accommodate this and also to reduce the super-normal profits by some airlines. However this overly competitive environment is causing a reduction in passenger yield, which we are well aware of, which is tailing off FY17-18 earnings, with an expected bottom during FY19. I suspect competitive behaviour in this industry will stall in the short-medium term as airlines begin to adjust route supply to accommodate falling yields and capped demand.

Having an efficient fleet and putting in the hard capex now, Air NZ is able to hedge against any future oil rises and cash rate increases, giving us a less risky outcome. Having some knowledge of Qantas' operations, they are currently putting off retiring their thirsty discontinued 747's to chase higher revenue. Their fleet is simply not as efficient as Air NZ's, so we will naturally see a greater yield going into the future due to AIR's low capital requirement and modernisation after re-hauling the fleet now.

I don't see any slow down in the economy or tourism numbers any time soon due to attractive pricing to fly and also the upcoming Chinese middle class. As Roger pointed out numerous times, AIR's ability to pay ~20cps p.a. on current metrics is extremely attractive in any industry. On a current ex-div basis, a gross yield of 14.4% [((0.20*0.28/0.72)+0.20) / (2.28-0.35)] is probably one of the best sustainable yields you will get within in the NZX, and certainly something the hounds have already descended on by the looks of it.

Overall a well run, efficient company that will perform strongly compared to its peers given any headwinds in the future. I'll be looking to reintroduce AIR into my portfolio after ex-div date depending on its movement as I suspect there are a few cats in it just for the top shelf meat being served next week. However the long-term charts aren't looking too flash at present, so it will be interesting to see where the price is heading relative to the MA's and support levels.

[see weed]

see weed - had lunch down on the beach in the sun today - juicy scallops and chips (no oysters in stock) and watched AIRplanes come into WLG

Only seemed to be the small ones at that time of day -bet you load factor was over 95%
If you can see a head or a hand waving in each window, then that means it is full...98%;). Scallops sound good, might get some tomorrow.

[Robomo]

Load factors on AKL-LAX-LHR don't seem to have been affected by competition to date. I booked this flight 8 months ago and paid for an upgrade on both sectors and being Gold Elite thought I had a good chance of getting this. Wrong, missed on both sectors. Business and Premium Economy 100% full with full-fare pax according to cabin crew and Economy 95% full. AIR's decision to expand the profitable BP and PE seating in the 777-300ER aircraft makes sense and leave the competitive minimum-profit Economy seats to everyone else. I'm booked Premium Economy on LHR-AKL in a few weeks so will be interested to see if I can get the BP upgrade I paid for.

Air NZ service the usual efficient friendly and breezy service they are renowned for, nothing but compliments from passengers around me.

[see weed]

Seems a lot of debate on AIR. Should we do a poll on SP ex divvy.

I think SP with be 2.35 to 2.40 prior and drop to 2.05 to 2.10 range ex.

Let me know if there's interest and I will start one
If it gains 5c every day between now and ex date which is in 7 buss. days. That would = 35c + today's closing price of $2.27= $2.620c. But it may not be 5c a day, so I will predict about $2.50c pre div and $2.15ish or higher ex div.:D.

[workingdad]

If it gains 5c every day between now and ex date which is in 7 buss. days. That would = 35c + today's closing price of $2.27= $2.620c. But it may not be 5c a day, so I will predict about $2.50c pre div and $2.15ish or higher ex div.:D.

If theres more insto sell off it stands to reason they may just be letting it climb every once and a while before dumping more on there but volumes this afternoon much more subdued than the mornings.

Be interesting as always to see how it plays out but I am going to hold onto the ones I have, long term in todays climate I think the risk versus benefit is weighing in favour of holding on to them. May top up myself ex divvy it if gets to that 2.02 resistance mark.

[Raz]

Load factors on AKL-LAX-LHR don't seem to have been affected by competition to date. I booked this flight 8 months ago and paid for an upgrade on both sectors and being Gold Elite thought I had a good chance of getting this. Wrong, missed on both sectors. Business and Premium Economy 100% full with full-fare pax according to cabin crew and Economy 95% full. AIR's decision to expand the profitable BP and PE seating in the 777-300ER aircraft makes sense and leave the competitive minimum-profit Economy seats to everyone else. I'm booked Premium Economy on LHR-AKL in a few weeks so will be interested to see if I can get the BP upgrade I paid for.

Air NZ service the usual efficient friendly and breezy service they are renowned for, nothing but compliments from passengers around me.

Usually now have limited luck on upgrades, pay full for BP or go without...I travel twelve return trips a year AUK to LAX for work , always full, just a question of what they are selling the economy seats for to ensure that. See many of the same characters on the flights so heaps of repeat customers. Tried Qantas earlier in the year and it sucked so changed back...

[Beagle]

http://www.sharechat.co.nz/article/3c9cb6f1/analysts-revise-down-air-nz-share-price-and-earnings-targets.html

Seems all the analysts have fallen into line with my thinking, (as expressed on here several weeks ago) of circa $500m before tax for FY17.

Interesting they all think AIR capable of sustaining 20 cps going forward, (I have double checked and can confirm they have more than ample imputation credits going forward)...guess they must have listened too and agree with management's point of view.

Wonder if they back tested it against balance sheet strength like I did, doubt any of them would have been working hard to do that on a Sunday...

Disc: Sitting by the dividend food bowl, tail wagging, waiting for premium steak.

P.S. Nothing too shabby with a target price of $2.20-$2.30 in 12 - 13 months time when there's 35 cents plus two forecasted 10 cent dividends (55 cents) in total dividends between now and then.

[mshierlaw]

Broke one of my rules on Friday & bought an airline.

Biggest problem was the boss called a H&S meeting @ 10.00AM (now for you share trading folks thats Health & Safety not Head & Shoulders) & that cost me 4 CPS (now for you non share trading folks that's Cents per Share not Cycles Per Second).

Anyway job done & risks fully understood, as always be comfortable with risks associated with your decisions. Only time will tell if I made the right decision on the day.

[Beagle]

http://www.nbr.co.nz/article/analysts-revise-down-air-nz-share-price-and-earnings-targets-b-193617

He also addresses the issue of swirling rumours on his tenure at AIR. Well worth a listen if you have 23 minutes spare at some stage.

[Snow Leopard]

Interestingly the idea of a sustainable $0.20 per annum ordinary dividend for the foreseeable future, derived from a cash flow analysis, appears on this thread way back in mid-May.

Best Wishes
Paper Tiger

[winner69]

Interestingly the idea of a sustainable $0.20 per annum ordinary dividend for the foreseeable future, derived from a cash flow analysis, appears on this thread way back in mid-May.

Best Wishes
Paper Tiger

....and you had it increasing at 3% pa as well

I know you are a modest little tiger and prefer hiding in the undergrowth rather than being in the spotlight ....but if you reposted that today most here would be rapt, esp your dividend outlook and the valuations getting close to 3 bucks

Latest analyst reports are confirmation of your work - pity it took them 4 months to work it out as well

[Raz]

Interestingly the idea of a sustainable $0.20 per annum ordinary dividend for the foreseeable future, derived from a cash flow analysis, appears on this thread way back in mid-May.

Best Wishes
Paper Tiger

Noted at the time although many may have missed it with the distraction of the share price diving.

[kiora]

So here is the latest Tiger Take on the medium term future of AIR. Calculated value is based on a cash flow model.

NPAT for 2016 - 2020 is derived from EBITDA figures from the brokers, AIR Announcements & Investor Presentations and the holes are filled with Educated Guessing.

Post 2020 everything is normalised long-term assumptions including that gearing is 50%, that AIR maintains fleet size, the average average fleet age is 9 years and normalised capex exceeds normalised depreciation by 20% - that digs into the available cash to give away a bit.

Another assumption is that from 2016 a total ordinary dividend of $0.20 raising at 3% pa thereafter is paid.

I have ignored VAH completely: if it is sold it is a one off; if it is kept then it may be a benefit, or not.

As you can see, I am slightly currently above current broker consensus of $2.82, but my value actually drops over the next two years and then ends up at $2.92 in June 2020.

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-AIR/NZX-AIR-20160514-Val-Sum_1.png

Obviously a lot of people are not going to like the above but that is how I see it at the moment.

Do Do Your Own Research.

Best Wishes
Paper Tiger

That's one smart cat

[RTFQ]

From memory AIR's best yields are from Oct to Apr. Charts show an increase during this period for the last 5 years. I'm thinking that the same will occur this year ex div.

[winner69]

That's one smart cat

.....and a very modest one

[couta1]

.....and a very modest one Love the satire winner.

[Bobdn]

Wouldn't it be great if the price goes to $2.35. Has a nice ring to it.

[Raz]

Not even September, plenty of time for the SP, coming home tonight, hoping for no false gunman reports at LAX. I really can't get over what an opportunity to buy last Friday was.

[Beagle]

Every once in a while, low hanging fruit hit you right in the face as you walk along the investment pathway of life :)

Regarding ex divvy price theories. Mine is that if it temporarily tips under $2.00 it won't be there for long as the forward metrics are simply too compelling under that price level.

[couta1]

Every once in a while, low hanging fruit hit you right in the face as you walk along the investment pathway of life :)

Regarding ex divvy price theories. Mine is that if it temporarily tips under $2.00 it won't be there for long as the forward metrics are simply too compelling under that price level. I will be buying more Ex divvy, especially if it drops more than the 35c in order to bring my average buy price down (I know that's the opposite to your strategy Roger but I reckon I've got enough now for the divvy) PS-Looking at the volume, I reckon Insto selling is still slowing the price rise down currently.

[winner69]

I agree with this
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11701941


Also wastes a lot of fuel as pilot waits for the god damned thing to finish before moving off - was ona flight once when he got impatient and went well before it finished. (Does the plane have to wait for safety briefing to finish?)

[workingdad]

I agree with this
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11701941


Also wastes a lot of fuel as pilot waits for the god damned thing to finish before moving off - was ona flight once when he got impatient and went well before it finished. (Does the plane have to wait for safety briefing to finish?)

I like them and actually seek them out prior to flying to see the new ones. Not sure on the logistics of prior to take off but seems enough time to get them in during taxying most occasions.

[Beagle]

I agree with this
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11701941


Also wastes a lot of fuel as pilot waits for the god damned thing to finish before moving off - was ona flight once when he got impatient and went well before it finished. (Does the plane have to wait for safety briefing to finish?)

Interesting that 70% of people liked AIR's safety video's saying they're a bit of fun. Bring back the Sports Illustrated 2014 one wasn't there to vote for as a favorite...oh well never mind. ( I seem to recall for some strange reason :) that one was controversial with some people too).